When Ajay Shriram and his younger brother Vikram came out of the room, their shirts were drenched with sweat. Not due to heat but nervousness. It was 1990. They had just met other members of the family behind the DCM group and been told about their share of the empire. Bharat Ram and Charat Ram, leaders of the Indian industry at the time, led the group and wanted to carve it out to avert conflict in the future.
Ajay and Vikram’s father, Sri Dhar, had left it to his brother Bansi Dhar and cousins to give his sons a fair deal. What they got was a chemicals and fertiliser complex at Kota in Rajasthan and the Swatantra Bharat Mills in Delhi.
The Kota complex was making a small annual profit. But Ajay and Vikram didn’t have the foggiest idea what it did. “I had been there just once. I had gone to Ranthambore hoping to see some tigers. My train back got cancelled. I called the family in Delhi and they sent a car to Kota,” says Ajay. Vikram had never been there.
They knew Swatantra better — that it was saddled with 7,000 workers, divided among 13 unions, and was making losses. “There were political meetings at the gates of the mill five times a week,” recalls Vikram. “Suddenly it came into our lap.”
Uncle Arun Bharat Ram, who heads chemicals company SRF, consoled them. “Don’t worry, son, we will support you. Take it up as a challenge.”
Ajay Shriram was 36 at the time, Vikram 32. Their father had retired five years earlier and lived in Kolkata. The third brother, Ajit, was young and needed his brothers to care for him. But they decided to pick up the gauntlet.
They were looked upon as a tad too young. Before the recast, both worked in different businesses of the group and reported to an executive director or a general manager. Suddenly they were managing directors. DCM Shriram, the company they formed in May 1990, had a debt-to-equity ratio of eight to one — a ratio the healthiest of cash flows will struggle to sustain.
Their uncles Arun Bharat Ram and Siddharth Shriram calmed the lenders’ nerves. They told them Ajay and Vikram could indeed manage a business on their own. But ANZ Grindlays called in its loans.
The brothers presented their plan to the bank. “We cannot pay now, but we will pay back. We will be happy if you came to our factory every quarter and looked at our books. If you go to court, it will be years before you got your loan back.” The plan worked so well that after a couple of years ANZ said they could take more money if they wanted.
The brothers had to burn a lot of money to modernise. Swatantra had spinning, weaving, and dying sections, and a silk mill. Ajay and Vikram met union leaders and politicians and told them their game plan. “If it continues like this, the mill will sink,” they said.
So they put together an attractive voluntary retirement scheme to cut manpower. As the numbers came down from 7,000 to 2,000, they shut down weaving, dyeing, and the inefficient silk mill.
In about three years, the remaining unit, spinning, reached a point where it no longer made losses. In 1996, the brothers shifted it, to Tonk, near Kota, under a Supreme Court order. This reduced the workforce further and eventually in 2007 the mill’s land in Delhi was sold to real estate developer DLF for a handsome `1,600 crore.
Soon after, the mill had to stay shut for two weeks because there was no money to buy naphtha, a key raw material. They raised capital and set up a captive power plant.
In 1996 the brothers made their first significant investment by setting up a chlor-alkali plant at Bharuch in Gujarat. But they kept the expenditure low by buying an old plant in Georgia, US, and shifting the machinery. In 1997 they started their sugar business and, some five years later, started a rural retail chain called Hariyali Kisaan Bazaar, which had to be eventually shut down.
Twenty five years after the brothers truly took charge of their business, its net worth is more than 50 times what it was in 1991.
Sugar also has been a painful business for nearly five years, plagued by adverse policies of governments. They have a plan for it, but that may be another entry under How They Did It.