Corporate Reports Business India u the magazine of the corporate world

Ajay, Ajit, Vikram: empire, d c m Ltd, taking their rich straddling sugar, legacy forward Blazing its own trail chemicals, vanaspati, pottery, fans, sewing A fulfilling silver anniversary for an over-one-century- machines, electric motors old company and capacitors. Knighted by King George VI in 1941 for his high enter- prise, Sir Shri Ram valued educa- t has been a remarkable 25 years accountant in a firm of bankers and tion and culture alongside business, for d c m Shriram Limited (d sl), realtors, who had neither money nor establishing the prestigious Shri Ram Ithe New Delhi-headquartered knowledge of machines, but a big College of Commerce in 1932, Shri conglomerate with a legacy span- dream for a cotton mill in his city Ram Institute for Industrial Research ning 107 years. of Delhi. Struck by Gopal Rai’s idea, in 1950 and Lady Shri Ram College d c m Shriram was spun out of a a group of city businessman met in in 1956, as also the Shri Ram Cen- four-way reconstitution in 1990 of 1888 at the house of Rai Bahadur tre for Performing Arts, a landmark the Shri Ram family’s businesses that Lala Ram Kishan Das, a meeting that in New Delhi’s theatre circuit. Music had their origin in the textile mill led to the registration of the mill was his passion and that led him to of Lala Shri Ram, the patriarch. The in 1889. Rai Bahadur was made its learn under Pt Ravi Shankar. late Shri Ram, whose 132nd birth chairman and Gopal Rai tasked with d c m charted spectacular growth anniversary was commemorated on the maintenance of accounts. Gopal and soon became a household name 27 April, was a 25-year-old youth Rai’s passing in 1906 paved the way and a trusted brand in the coun- of modest means in 1909 when he for his nephew to join three years try, as also one of the earliest joint joined the Delhi Cloth & General later. stock companies and among the top Mills Co, northern India’s first tex- Having an entrepreneurial pluck, five private enterprises in India by tile factory. Shri Ram soon acquired the mill, 1970. Unfortunately it was also riven The mill had come into being at renamed it Delhi Cloth Mills (d c m), by one of the earliest fraternal con- the initiative of his tau (father’s elder and within years diversified his textile flicts of corporate India, with fis- brother), Lala Gopal Rai, a simple business into a blue chip industrial sures cleaving the second generation

u 58 u june 20-july 3, 2016 Business India u the magazine of the corporate world Corporate Reports itself, led by Shri Ram’s sons Bharat Ram and Charat Ram, their third brother, Murli Dhar, having died, along with his wife, in an air crash in 1949. This debility exposed the com- pany in 1986 to one of the earliest hostile takeover bids in the country, by London-based businessman Lord Swraj Paul, who backed off only at the intercession of then Prime Min- ister Rajiv Gandhi. Under a Scheme of Arrangement approved by its shareholders and creditors, and also by a Delhi High Court order, d c m Ltd on 1 April 1990 stood quadri-partitioned into d c m Ltd, d c m Shriram Industries Ltd, d c m Shriram Consolidated Ltd, and Shriram Industrial Enterprises Water Reservoir Created. DCM Shriram. Kota Ltd. As per the scheme, d c m Ltd’s shareholders were allotted shares in owned with S.P. Lohia (of Indone- modified) crops, and crop care chem- d c m Shriram Industries and Shriram sia-based pt Indo Rama), was sold in icals like insecticides, herbicides and Industrial Enterprises in the ratio of 2007 to d l f, India’s largest property fungicides. The second is the Chlor- one share in each of the four com- developer, for `1,675 crore, d s c l get- Vinyl Business that produces caus- panies for every four shares held by ting half the proceeds. Swatantra mill tic soda, calcium carbide, chlorine, them in d c m Ltd as on 21 September was sold in 2014 for `17.12 crore. vinyl resins, vinyl compounds, 1990. At the time of this court-mon- Between 1990 and 2000, d s c l and cement. itored division, the turnover of the added to its portfolio Shriram Alkali The company has added value spent force that d c m Ltd had become & Chemicals, in Bharuch, for pro- businesses to these domains, such by then was `774 crore, with `50 ducing chlor-alkali, Shriram Envi- as Hyderabad-based Shriram Bioseed crore of p b d i t (profit before deprecia- ronment & Allied Services, in Genetics India Ltd, with overseas tion, interest and taxes). Gurgaon, Ghaghagra Sugar, in Uttar offices in Vietnam, Indonesia, the Lala Shri Ram’s great grand- Pradesh’s Lakhimpur Kheri district, Philippines and Thailand. Another sons, Ajay, Vikram and Ajit Shriram, followed by three more sugar units is Fenesta Building Systems, the are now taking his rich legacy for- in the adjacent Hardoi district, and country’s best selling u p vc (unplas- ward through the part of the busi- d s c l Energy Services Co Ltd, New ticised polyvinyl chloride) windows ness that was parcelled out to them, Delhi, for optimising energy usage and doors brand that offers com- namely, d c m Shriram Consolidated of businesses, industry and institu- plete solutions from design and fab- Ltd (d s c l), which they renamed d c m tions, and for providing engineering rication to on-site installation. It has Shriram Ltd (d sl) in 2014. Ajay, at 62 and project management services for fabrication units at Bhiwadi, in Raj- the oldest of the fraternal troika, is biomass and conventional fuel-based asthan, Bangalore, Mumbai, Hydera- now chairman & senior managing power plants. bad and Chennai. director, while Vikram is 58 and vice- Following a series of divestments, chairman & m d, and Ajit Shriram, and mergers and acquisitions over the Divestments and mergers 49, & joint m d. years, d s c l , and then d sl , flourished d c m Shriram’s manufacturing facil- The businesses they acquired were as an integrated business conglomer- ities of fertiliser, chlor-vinyl and Shriram Fertilisers & Chemicals, in ate, with an extensive and growing cement in Kota are served by a 133 Kota, Rajasthan, which produced presence across the entire agri value m w coal-based captive power plant, urea, plastics, chlor-alkali and dedi- chain and chlor-vinyl industry. The with another of 55 m w operating cated power, Shriram Cement Works, brothers were amongst the first to in Bharuch. Urea had its upas and also in Kota, Swatantra Bharat Mills, set up a chain of rural shops in India downs. Kota has a urea capacity of in Tonk, Rajasthan, and d c m Silk and d sl’s present portfolio com- 379,000 t pa (tonnes per annum), Mills, in New Delhi. At the time of prises primarily two types of busi- with a 700 t pd (tonnes per day) the division, some observers felt that nesses, one being Agri-Rural, served ammonia plant alongside, ammonia this branch of the family was left by a rural retail chain and spanning a feedstock for urea manufacture. with businesses that were struggling. sugar, basic nutrients like urea and Chlor-alkali capacities total 700 t pd With textiles on the decline, the silk other fertilisers, speciality nutrients, in both Kota and Bharuch. The four mill, with its 38-acre property 5 km hybrid, transgenic and open-polli- sugar factories, which source cane from Connaught Place and equally nated (o p) seeds, and g m (genetically from about 150,000 farmers, have

u 59 u june 20-july 3, 2016 Corporate Reports Business India u the magazine of the corporate world a combined installed capacity of sleepless nights,” says Ajay Shriram. coming on board to mentor them – 33,000 t c d (tonnes crushed daily), “It is easy to secure loans, but the he is very close to the three broth- the bagasse yielded firing a captive interest meter never stops ticking, ers and still on the d d s l board – and plant of 94.5 m w capacity. and the borrower has to deliver some other industry veterans too In late 2002, the company results, meet commitments, and joining as directors, the brothers divested its remnant sharehold- endeavour to realise the full scope of managed to steady their business. ing in all its Shriram group peers. any proposal he takes to the board.” They convinced Mantosh Sondhi, The final offload was from the Arun an early ‘technocrat’ secretary (of Bharat Ram-owned industrial yarn New benchmarks steel, coal and mines) to the Govern- and fabrics major, srf, or Shri Ram Having grown in the shadows of leg- ment and founder of the heavy vehi- Fibres Ltd, where it sold off its resid- ends of his family, he acknowledges cles factory at Avadi and of Bokaro ual 1.5 per cent stake to srf’s invest- that his company has made mistakes, Steel, to become the chairman. “He ment company. d s c l originally held “which is part of any business learn- helped us lay down the processes and 4 per cent, its biggest shareholding ing”, but maintains that unless one systems that we are still following,” in a Shriram group company. Today learns and grows out of such errors, Ajay Shriram notes. Other board in d c m Shriram, the promoters and success will be elusive. “We desire to members included D.N. Davar, then their groups have a combined stake be financially sound, not performing chairman, Industrial Finance Corpo- of 63.88 per cent, public sharehold- for others, but for our own selves and ration of India, and S.S. Baijal, former ing being 34 per cent, and shares for our board of directors,” he men- chairman, ic i group of companies. held by employee trusts, two per tions. “We pride ourselves at being The board formed an arbitra- cent. The group has a total work- a sound group with businesses that tion committee of Sondhi and Baijal force of around 5,000 across all loca- give consistent returns that are sat- to address any vexatious issue that tions, apart from a team of about 200 isfactory for all stakeholders, includ- might crop up between any of the researchers in the bioseed business. ing shareholders.” Vikram Shriram companies. “Whatever happened, Ajay Shriram happened in the is gratified that past,” maintains his company has Ajay Shriram. abided by its phi- “The restruc- losophy of steady turing that took growth over the place in d c m and years. The reve- the Shriram fam- nue of `360 crore ily was one of that d s c l regis- the most respect- tered a year after ful, dignified the division, in Manufacturing Complex, Kota and transparent 1990-91, has ways of restruc- now (in 2015-16) turing compared surged over 16 times to `5,841 crore interjects, “For a quarter of a cen- to many other companies.” Inciden- for d sl , while its p b d i t has risen tury, we have set new benchmarks of tally, Arun Bharat Ram, a past presi- almost 24 times, from `23 crore to excellence and crossed many a mile- dent of the Confederation of Indian `544 crore. Net worth has spiralled stone, the company having had the Industry (c i i), had drafted a ‘family from `27 crore to `2,096 crore – up good fortune of building on the rich constitution’ that delineates a char- from `1,859 crore in 2014-15. The legacy of Delhi Cloth Mills.” He adds ter for the Shri Ram family for ensur- company’s market capitalisation that the step by step journey has ing harmony within the fold. stands at `3,121 crore, while its share attained a c ag r of 17 to 18 per cent. d c m has charted many an indi- price is around `193, with earnings Ajay Shriram reminisces that vidual success story, with its earlier per share being `21.46. Over the pre- when their part of the business employees having been it entrepre- vious 52 weeks, the share price has was bequeathed to them, he and neurs Shiva Nadar and Ashok Soota, swung from a low of `100 on 5 Octo- his brothers were the youngest and and even table wizard Zakir Hus- ber 2015 to `203 on 30 May 2016. least experienced of the Shriram sain. Soota, the 73-year-old execu- “By our corporate philosophy, family. He was 36 then and Vikram tive chairman of the next generation I think I can say this for all of us, Shriram, 32, with then 23-year-old digital engineering company, Hap- that we have done well, that we have Ajit Shriram entering the business piest Minds, and one widely recogn- grown in a steady, sound, structured later. Their father, Shri Dhar, who ised as a pioneering leader of India’s and planned manner, we sleep well had retired years earlier to settle in it industry, had joined d c m in 1965 at night, and do not have the kind of Kolkata, had left it to his brother as a 22-year-old senior management problems many groups that we read Bansi Dhar and cousins to give his trainee. Following his stint there, he in the newspapers about have, such sons a fair deal. With their uncle, srf led the growth of Wipro’s it business as overwhelming debts that give chairman Arun Bharat Ram, now 74, from $2 million to $500 million,

u 60 u june 20-july 3, 2016 Business India u the magazine of the corporate world Corporate Reports before setting off on his own to found it and outsourcing company Mindtree in Bangalore. He created Happiest Minds, also in Bangalore, after stewarding Mindtree through a successful ipo. “I joined d c m at a time it was the fifth largest company in India and ran probably the best executive training programme in the country,” he recalls. “The Shriram group com- prised primarily two halves, led by Bharat Ram and Charat Ram respec- tively, and the working style and cultures were dramatically dif- ferent in the two parts.” At the end of the training year, he was deputed to As a ceo’s skills are Charat Ram’s division fungible, it gave me where he would spend confidence that having the next 19 years. been a successful ceo in He soon became the youngest general one industry, I could manager, Usha Fan replicate the success gained him a `211 crore. Net debt stood at `1,057 Industries, the single in the it industry too. senior manage- crore – up from `688 crore the pre- largest fan manufac- Ashok Soota ment perspective vious year, as a result of the ongoing turer in the world at that early in his career. capacity expansion in chlor-alkali time. In 1978, he became “As a c e o’s skills and sugar businesses, and higher sub- c e o, Shriram Refrigeration, are fungible, it gave sidy receivables and sugar inventory. where he turned around the com- me confidence that having Gross debt also rose, to `1,068 crore pany which had been unprofitable been a successful c e o in one from `760 crore, being 0.51 times for four straight years. He made it industry, I could replicate the suc- equity versus 0.40 times in 2014-15. profitable in the first of the six years cess in the it industry too, though I Lower cost of production across busi- he was its c e o. had no experience of it when I joined ness segments in Q4 2015-16 also saw Wipro,” he recalls. “There was a lot the company emerge from red, with Excellent leaders of focus on r&d in Shriram Refriger- a net profit of `51 crore, following a “Charat Ram was amongst the best ation, and the ability to derive value net loss of `40 crore in the previous developers of managers and, during from r&d was a key factor for suc- quarter. Finance costs were lower at my career, I got several interesting cess in Wipro, where we designed our `86 crore in 2015-16, from `112 crore career assignments, including a two- own computers; and finally, Charat in 2014-15. year stint in Usha, Sri Lanka, which Ram was entrepreneurial and some J.K. Jain, executive director & gave me a broad range of responsibil- of that capability must have got chief financial officer, d c m Shriram, ities at a young age,” remarks Soota. transmitted to help me in the entre- who has been with the company for “I continue to be in close touch with preneurial stage of my career.” He the last 22 years, says the outlook on all the leaders, who inherited parts of adds that d c m Shriram and srf are net or gross debt going into March the partitioned Shriram group.” He, probably the most successful of the 2017 would mainly depend on the Arun Bharat Ram and Ajay Shriram quadrisected parts. subsidy outstanding. The company also have a close association through Though the chemicals and agro was reimbursed about `200 crore c i i, as all three are its past presidents. businesses tend to be cyclical in of the subsidy dues of `760 crore in “This generation of leaders have all nature, d c m Shriram has managed April. According to Vikram Shriram, demonstrated high levels of compe- to battle its way through the coun- the government pays no interest tency and taken their respective parts try’s drought-riddled farmscape to on delayed payments, and banks of the old empire to greater heights, emerge with stable net revenues of too make no concessional lendings with some obviously more success- `5,841 crore for 2015-16, from `5,639 against this recoverable, though it is fully than others,” he notes. crore the previous year. Similarly, its as per a government formula. Asked how his d c m experience p b d i t rose 21 per cent to `544 crore Ajay Shriram feels the direct bene- pitchforked him to his it career, from `450 crore, while pbi t increased fit transfer d( b t) for fertilisers, envis- Soota maintains that being pro- to `445 crore from `340 crore, and aged in the Union Budget of 2016-17 pelled into a c e o role by the age of 34 pat, by 41 per cent to `297 crore from and introduced as a pilot across a few

u 61 u june 20-july 3, 2016 Corporate Reports Business India u the magazine of the corporate world

Calcium Carbide Plant, Kota

districts, may take at least two years revenues in 2015-16, Vikram Shriram Pradesh produced 27 lakh tonnes of to become pan-India, constraining indicates that this segment faced sugar, and 64 mills in Karnataka pro- companies like his till then with challenges on account of adverse duced 21.12 lakh tonnes of sugar. higher working capital requirements. weather conditions during the year. Ajay Shriram, who is the imme- d b t entails direct delivery of subsidy He was, however, heartened by his diate past president of c i i, urges for to the bank accounts of farmers, but company’s overall performance that the ‘rational approach’ of the Centre replicating the d b t model for lpg to was driven by improved sugar busi- and states in respect of cane pricing, fertilisers will require vigorous scru- ness fundamentals and stability of ethanol, exports, etc to continue. tiny to eliminate fake beneficiaries. the chlor-vinyl business. The sugar He cites two reasons for an adequate industry’s viability too improved focus, and thrust, on India’s farm Bringing changes during H2 2015-16, with lower pro- sector. “One is that 82 per cent of the Vikram Shriram notes that agricul- duction costs and sugar prices firm- 110 million farming families have tural subsidies are universal, but ing up to `3,031 per quintal in Q4 landholdings of less than two hect- delayed subsidy payments in India, 2015-16 from `2,675 per quintal in ares, and the second is, agriculture which can range from three to six Q3 2015-16. Sugar recovery too was being a concurrent subject, states are months, constrict cash flow.H e urges high, at 11.1 per cent, versus 9.9 per responsible for utilising the funds for a gradual price increase for all fer- cent the last season when there was a earmarked by the Centre on the pro- tilisers, and for removing middlemen `98 crore inventory write-down due grammes envisaged,” he observes. owing to whom the farmer loses out. to negative margins. c i i has been urging the Union gov- He lauds the government for bring- Despite lower availability of sugar- ernment to push the states to imple- ing in the necessary changes in agri- cane, 110.9 lakh tonnes of sugar have ment the Centre’s schemes, whether culture, with, for instance, its intent been produced till 15 January, up regarding irrigation, power, revoking to abolish the Agricultural Pro- 6.81 per cent from the same period the a p m c Act, easing fertiliser avail- duce Market Committee (a p m c ) Act the year before, mainly due to early ability, soil cards, etc. already showing results. crushing operations. Against the Vikram Shriram says bioseed rev- The brothers deem their bor- mandatory export target of 32 lakh enue stood lower at `485 crore last rowings to be at comfortable levels, tonnes of sugar, 7 lakh tonnes were year from `570 crore the year before despite undertaking projects worth exported till 15 January, the bal- as a deficient monsoon affected sales `725 crore over 2015-16 and 2016-17, ance 25 lakh tonnes to be exported of Bt cotton and corn seeds. Reve- which, they say, will add significant by September 2016. An Indian Sugar nue of international business was value to the company from this year Manufacturers’ Association (ISMA) also subdued as the El Nino phenom- onwards. Its long term credit rating statement mentions that compared to enon affected off-take in the Phil- has been upgraded to AA- from the the 2014-15 sugar season, sugar pro- ippines and Vietnam. According to earlier A+, with the short term rating duction in Karnataka, Uttar Pradesh him, while the Centre’s decision to affirmed at A1+ by the investment and Maharashtra in the current sea- regulate Bt cotton seed prices and information and credit rating agency, son till 15 January was higher by 3.4, trait value may affect business, the ic r a . The board has recommended a 2 and 1 lakh tonnes respectively. predicted normal monsoon in 2016 final dividend of 40 per cent, total While 168 sugar mills in operation is likely to boost performance. “Our dividend for 2015-16 being 160 per in Maharashtra crushed about 415.9 high focus on r&d and a strong prod- cent – up from 110 per cent the pre- lakh tonnes of sugarcane, producing uct pipeline are augmenting product vious year. 44 lakh tonnes of sugar till 15 Jan- portfolio, together with our market- Though the agri-input busi- uary, 116 sugar mills in the second ing efforts to enable growth in India ness contributed to 53 per cent of largest sugar producing state of Uttar and abroad,” he adds.

u 62 u june 20-july 3, 2016 Business India u the magazine of the corporate world Corporate Reports

The Shrirams acquired Bioseed producers to avail of a Genetics International Inc in 2002 The urea story fixed per-tonne subsidy. to form Shriram Bioseeds, a biotech- wenty-eight million complicated than the While the m r p of d a p (di- nology company specialising in r&d, Ttonnes of urea, or 56 straight ‘one product-12 ammonium phosphate) is field and lab testing, data review, crore 50-kg bags, are sold cylinders’ formula for lpg. about `25,000 per tonne, production, farm management and annually in India. With an Urea’s maximum retail it is around `15,500 for farmer interaction. Bioseed has nine individual farmer applying price (m r p) is subsidised at m o p (muriate of potash), breeding stations, over 30 testing sta- urea and other fertilisers in source and fixed at` 5,360 making the subsidies pay- tions and 8,000 germplasm. diverse proportions and per tonne, or `268 per 50 able to producers `12,350 volumes according to his kg bag. m r p s for other for d a p and `9,300 for Scaling up needs, topography and fertilisers are supposedly m o p. The subsidy on urea The order book position of Fenesta cropping patterns, direct decontrolled, though varies depending on the Building Systems of Shriram Axi- benefit transfer d ( bt) in they are to be capped assessed production costs all Pvt Ltd, a joint venture between fertilisers is rendered more at ‘reasonable’ levels for for each plant. u Shriram PolyTech (d sl’s p vc com- pounding business) and the US’s Axi- all Corp (now being acquired by rival tonnes of cement in 2015-16, com- algorithms so as to control the effi- Westlake Chemical for $3.8 billion), pared to 3,90,316 tonnes the year ciency of that particular equipment went up to `77.8 crore in 2015-16 before. Continued stress on prices, or process in an improved manner,” from `67 crore in 2014-15, while rev- however, depressed realisations to explains Ajit Shriram. enue rose from `48.5 crore to `56.9 `2,667 a tonne, from `2,860. Revenue Yet another feature in use by the crore. Prem Das, president & busi- remained flat, `139 crore from `137 company is the distributed control ness head (plastics & power), d c m crore, though pbi t loss was pared system (d c s) for a process or plant Shriram, who joined the company down from `5.1 crore to `80 lakh due where, unlike a single controller at a as a management trainee in 1985, to higher volumes and lower input central location, its control elements points out that Fenesta has installed costs. “sc w is a pollution control are distributed throughout the sys- over a million windows and doors plant, and used to produce around tem. A hierarchy of controllers, con- across nearly 150,000 homes, and has two lakh tonnes per year, which has nected by communications networks a sales and service presence in some now more than doubled,” he says. for command and monitoring, over- 100 cities through 20 sales offices, Ajit Shriram, who is tech savvy, has sees manufacturing processes that four factories, nine signature studios, been imparting a technology thrust are continuous or batch-oriented, nearly 100 dealer showrooms and a to the company for streamlining such as fertilisers, cement and power direct sales force of more than 300 operations, upgrading management generation. d c s s are connected to executives. systems and optimising costs. “d c w sensors and actuators and use set- The company is scaling up these Shriram is India’s first company to be point control to control the flow of operations and believes this business implementing the upgraded sap s/4 material through the plant. will be a growth driver in future. h a n a enterprise resource planning Commenting on d c m Shriram’s Indicating that multiple grades of (erp) software,” he mentions. “sap 2015-16 financials, Emkay Research p vc resins are produced at the 70,000 is our implementation partner and finds the company having posted t pa capacity facility in Kota, cover- with the programme going live this a robust set of numbers, driven by ing wide end-use markets, Das men- April, this financial year will com- strong margins in its chemicals seg- tions that these resins are made from plete on this new package.” s/4 h a n a ment and a turnaround in its sugar calcium carbide that is produced at is an advanced in-memory platform business. It sees the company benefit- the adjacent 112,000 t pa capacity hosting a next-generation business ing in 2016-17 from the momentum unit. Part of the calcium carbide is suite deployable in the cloud or on- across its segments, with chemicals also sold to various industrial users. premise to drive value across lines of poised for an earnings growth from Vinoo Mehta, senior vice-pres- business and industries. the commercialisation of ongoing ident & business head, cement, d sl has also for long been using capex, while sugar will become more d c m Shriram, says Shriram Cement Fuzzy Logic (fl) to improve various profitable from increased realisation. Works (sc w) is a wet process cement aspects of plant efficiency. fl is an “Driven by all segments, d c m plant based on the calcium hydrox- equipment-control system that mim- Shriram’s earnings will grow at a ide sludge of the sister calcium car- ics human decision-making, almost c ag r of 25 per cent over 2016-18, as bide plant. Commissioned in 1987 instantaneously arriving at a definite we upgrade our earnings for 2016-17 with technical know-how from conclusion drawn from ambiguous, by 16 per cent,” notes Emkay, rec- France’s Lafarge Coppee Lavelin, the imprecise or missing input informa- ommending bu y on a revised tar- plant produces Shriram 53, Shriram tion. “Fuzzy Logic receives inputs geted share price of `260, based on Nirman and Shriram Silver brand from diverse parameters, analyses a ninefold increase in the `28.6 eps cements, besides trading in PoP them based on initial it program- by end of 2017-18. It sees this growth (plaster of Paris). sc w sold 4,26,665 ming, and then sifts through those driven by the commissioning of new

u 63 u june 20-july 3, 2016 Corporate Reports Business India u the magazine of the corporate world capacity in the chemical segment, range of `1,000 crore.” flakes, and potassium carbonate.A nti- a turnaround in sugar profitability, He acknowledges that his com- dumping duty has now been imposed despite lower sales, owing to higher pany has been selling molasses in on such imports. Jain, however, terms realisations that are expected to sus- the market as it has no distillery yet as low the seven per cent import duty tain in the near term, and demand to ferment it into ethanol. With eth- on caustic soda that has made India picking up in the company’s agri- anol blending of motor fuel becom- its net importer, and believes that any input segment on expectations of a ing mandatory, sugar companies are commodity business, especially one normal monsoon. profiting from selling ethanol. “We driven by supply and demand, has to J.K. Jain, executive director & chief have sought clearance from the State be competitive in terms of production financial officer, d c m Shriram, who Electricity Board and licence from cost. But he views the 6-7 per cent has been with the company for the the environment ministry for such a growth in this business of his com- last 22 years, says capacity expansion distillery and until the time we set pany over the last few years as fairly by 1,60,000 tonnes will increase the up such a facility, we will need to stable and positive. 2,70,000-tonne annual production continue selling molasses in the mar- “Thoughts keep coming up, while in the chemicals business to between ket,” he adds. on demerging the company’s varied 3,30,000 and 3,40,000 tonnes a year Vikram Shriram says d c m Shriram segments like farming, chlor-alkali on an annualised basis. Ajay Shriram continuously benchmarks itself with and sugar, to unlock investor value,” adds that the Bharuch unit will come its counterparts in the different seg- remarks Ajay Shriram. “There is also to full capacity in the next four ments, for instance, being the third the belief that conglomerates have months with the expan- their own strengths and sion of electrolysers – salt capabilities of cross-sup- (sodium chloride) is elec- porting businesses when trolysed in the chlor-alkali chips are up or down.” process to produce chlorine The brothers look after and caustic soda (sodium various facets of the busi- hydroxide) – as well as with ness and desist from the setting up of an over 60 implementing any deci- m w power plant. sion until all three agree These measures entail on it. “We do disagree at an investment of `600 times – this is natural and crore, of which `370 crore healthy – but eventually has been spent till date reach a consensus,” says and the balance will be Ajay Shriram. The trio has invested up to the end of been going on an annual the second quarter of this Shriram Urea bags ‘brothers’ retreat’ for the financial year. This will be a brown- past 16 years for sessions conducted field expansion – resulting in pro- largest chlor-alkali manufacturer by Sushanta Banerjee of the organ- duction of 500 t pd of caustic soda in India, after Gujarat state-owned isation development consultancy and 60 m w of power – as the pres- Gujarat Alkalies & Chemicals, in called Samuday Psycon. Their sons ent facility in Bharuch, originally Vadodara, and Aditya Birla Chemi- – Ajay’s sons Aditya, who is senior commissioned in 1995-96, produces cals (India). a b c i l was merged with vp, Chemicals, and Anand, Vikram’s 450 t pd of caustic soda and 55 m w of Grasim in April 2015 to consolidate son Pranav, who is senior officer with power. The project return on invest- Grasim’s leadership position in the Fenesta, and Ajit’s son Varun – are ment (RoI) envisaged is an average domestic chlor-alkali industry, with being groomed as the next genera- 25 per cent, says Jain. its capacity increasing from 4,52,500 tion Shrirams. A further `120 crore will be t pa to 884,200 t pa . The caustic soda “The diversified nature of our invested for a high pressure boiler capacities of Gujarat Alkalies have company has helped deliver a strong that will help generate an additional grown from 37,425 t pa when it was performance, and our cash genera- 18 m w for powering one of the sugar set up in 1973 to 3,58,760 t pa . tions will strengthen further after factories, from the same volume of There are 34 active chlor-alkali commissioning of new projects in bagasse. “This will enable us to sell units in India, and while chlorine is 2016-17, enabling us to take more this additional power, gaining us the driving product globally for the growth initiatives in coming years,” better revenue and efficiency,” main- chlor-alkali industry, in India, it is notes Ajay Shriram. “Besides, our tains Ajay Shriram. “We also spend caustic soda. Challenged by cheap endeavour to deploy the latest tech- `80-100 crore every year for upgrada- imports through reduced custom nologies and best business practices tion, debottlenecking, instrumenta- duties, Indian manufacturers peti- will ensure our competitiveness and tion, environment management, etc, tioned the designated authority for growth over the long-term.” so in the last one year and the next protection against unfair competition u SAROSH BANA two, our total capex would be in the in products like caustic soda lye and [email protected]

u 64 u june 20-july 3, 2016