31.1.2013
N Srinivasan, India Cements VC & MD: Sportsman Spirit in Cementing Success
I am with Shri N S Sir at the centenary celebration of his Father in 2012,
V Balasubramanian, Asst. Resident Editor, Economic Times
In my long innings as a business journalist, I have interacted with several top industrialists and CEOs in TN. I have won their goodwill thanks to my strong platform- ET and by belief in fostering long term relationship.
One among them is Shri N Srinivasan, Vice-Chairman & MD, India Cements. I have lot of respect for him and proud of enjoying his goodwill and affection.
It is worth profiling his fascinating business journey for inspiring the gen next leaders in family business as well for entrepreneurs. They can a learn a lot from his art of managing and growing business in good and bad times, on how to manage the turbulent political environ and how to retain and inspire your team and how to safeguard the interest of all stake holders. He is one of the most successful businessmen from the south.
In November 2012, when the Indian postal department released a commemorative postage stamp in honour of ICL founder, late Sri T S Narayanaswami, who is Srinivasan’s father, I was touched by the company’s apt tribute to TSN. It said, “ There are those who live by the book and others whose lives are a textbook on how to live”.
Talking about his father on the occasion, NS said, "My father was a mentor and inspiration to many. He was one of the entrepreneurs of Independent India who found opportunities and contributed to the industrialisation with a vision and determination. India Cements came out with the first public issue post Independence".
TSN, whose birth centenary was celebrated in 2012, was known for his excellent qualities as an industrialist, visionary, patriot, philanthropist and humanist. We are all now witnessing the rich legacy and great human qualities of Father being preserved and sincerely followed with an abundant passion by his son, Srinivasan, his family and the dedicated ICL team. Shri Srinivasan is an highly educated and well read businessmen. After doing his B Sc technical, he obtained his Master of science from Chicago.
A known figher, Srinivasan has weathered storms and turbulent times in business. He has retrieved the company from the brink and restored it on the high profit track. Perhaps, his sportsman spirit helped the company to sail through rough weathers.
In the eighties, when I was a reporter in Financial Express, my Boss gave me the task of getting the High Court order relating to the tussle between N Srinivasan and late K S Narayanan, Chairman, Chemplast group. That time, MNC ,ITC was trying to acquire ICL and it figured in the Assembly when MGR was CM. I got a copy of the court order and filed the report. That time, NS was removed from his MD post and IDBI appointed its senior official to manage the company.
It was in 1989, when DMK returned to power, headed by CM, Drr. M. Karunanidhi, NS with the support of his close friend, late Murasoli Maran, who was a Minister in the NF Govt at the centre, regained control from IDBI and became MD. By that time, I had joined ET and came into contact with NS.
In his second innings, Srinivasan turned an aggressive industrialist from the conservative south. In the nineties, he stormed the corporate world by a string of mergers and acquisitions. The deals included major cement plants in Andhra Pradesh like Coromandel Cement, Yerrakuntala plant of PSU, CCI, besides Visaka and Raasi.
Even as Chemplast retained its stake as co- promoter, NS focused on entering areas in which Sanmar group had interest. That way, he saw ICL entering property development, shipping, financial services ( by acquiring Aruna Sugars Finance).
He made ICL largest cement producer in the south. Starting with its first plant set up in 1949 at Sankarnagar, it has grown rapidly with seven plants in Tamil Nadu and Andhra Pradesh with a combined capacity of 14 million tonnes per annum. It also entered North India with a 1.5 million tonnes plant set up in Rajasthan through its subsidiary, Trinetra Cement.
ICL under his dynamic leadership, ICL saw a five fold increase in turnover from Rs 1033 crore in 2002-03 to Rs 4741 crore in 2011-12. He believed in sustaining the good business model of its core business- cement and keeping the assets in good condition. In the process, the company entered related fields like shipping, power generation and coal mining. ICL also has a large sugar factory in Karnataka. It held a strategic stake in Ponni Sugars.
He made Chennai proud by successfully bidding for IPL cricket game for $ 91 Billion in 2008 and has built a strong brand in Chennai super kings. He is now the president of BCCI . He has been spearheading TN cricket administration and supporting the development of able players at the State and national level.
Even as ICL retained focus on the core business- cement, to his bad luck, market slowed down. The states also decided to phase out sales tax concession for fresh capacities. The company caught everyone's attention when it slipped into red with a net loss of Rs 7.57 crore in 2001-02 on a turnover of Rs 1313 crore. It came after its peak profit of Rs 87 crore in 1998-99 and Rs 51.15 crore in 2000-01.
But, he did not lose sleep. Rather, he said, "We always had faith in our business model. We knew this was a market driven condition and we would sail through. We had kept our assets in good condition. At every stage, we turned proactive and retained our focus on the core business (cement) and cost cutting. We did not divert money buying aircraft and producing cinema. And, we did come out without losing our integrity.".
Again, In 2002-03, when ICL reported a colossal loss of Rs 307.23 crore in a single year on lower turnover of Rs 1033 crore, it was thought Srinivasan's empire was cracking. ICL's fortunes were dented by its mounting debts of over Rs 1800 crore, market slow down and drop in realisation and above all new Government (AIADMK) in the State in May 2001, which ran a tirade against him for being close to late union Minister and DMK leader, Murasoli Maran. It slapped a dual sales tax on cement sold in the State.
So, ICL again reported a loss of Rs 112.73 crore in 2003-04. In January 2003, when it had a huge debt of Rs 1800 crore, the corporate debt restructuring cleared by RBI had stipulated infusing Rs 800 crore fresh funds by March 2006. There were pressures on him to sell Raasi and Visaka. He took the setback as a challenge and decided to fight back.
Thanks to his efforts, ICL achieved a turnaround . When the buoyancy returned to the market since the last quarter of 2005-06, ICL reaped the benefits of its efforts. In the third quarter of 2006-07, ICL clocked a net profit of Rs 309.69 crore and wiped out its accumulated loss of Rs 262.53 crore.
With all his plants operating at full capacity and upswing in cement prices in the south, in the whole of 2006-07, it reported a record net profit of Rs 449.5 crore on a turnover of Rs 2,367 crore against Rs 45.31 crore in 2005-06.
He saw ICL coming in full circle having achieved a turnaround, slashed interest cost and debt from the peak of Rs 1800 crore to Rs 1000 crore( bearing 11.5% interest), consolidated promoter’ holding and market share.
If Essar’s revival through CDR ( corporate debt restructuring) mechanism turned a case study in the West, it was ICL’s turnaround saga through CDR route in the south. What had earned him the name of a serious player in the industry is that even during the worst time, he did not sell any asset and remained focused on the core business.
He focused on financial re-engineering, continued cost cutting, consolidation of promoter holding and market share. In December 2004, it raised the largest amount (in the south) of Rs 655 crore ( $ 149 Million) from Hong Kong based fund manager, Asia Debt Management (ADC) by way of debt and equity.
In October 2005, when the company hit recovery path, Srinivasan faced an unexpected but crucial challenge. As his team was preparing for the road show for its $ 100 Million GDR issue, ICL's co-promoter, Sanmar group wanted to divest its stake.
Srinivasan had no option but to find resources for acquiring the 11.91% stake for around Rs 192 crore. Lest, it would have slipped to another hand, trigger-ing an open offer and threatening his hold over the company. Later, Sanmar further diluted its holding and the deal cost Srinivasan another Rs 124 crore.
He raised the GDR issue successfully. It also raised $ 75 million through an FCCB issue to fund its expansion of capacity from 2 million tonnes to 11 million tonnes by March 2008.
ICL’s turnaround saga made up the industry sit up and notice it. It was a hot topic in B schools and corporate corridors. He turned a favourite speaker as a turnaround artist in management sessions in the city.
I remember in April 2007, when Madras chamber organised a break fast session at a five-star hotel on, 'Managing in turbulent times' NS was picked up to share his thoughts on the theme with CEOs and professionals. He was aptly qualified for the session having made a phoenix-like rise from the ashes.
At the AIMA national convention in September 2009 for which he was the chairman, he said,” the corporate world has seen a lot of turbulence, with business leaders driven by short-term gain, which in turn, has resulted in the demise of a number of world-class companies”.
He said the surest way to build lasting value in companies was to focus on its core business. Although diversifications promise untapped potential, only very few business houses have succeeded in businesses far removed from their core competencies”.
Friends of Srini, as they call him, say, “ As an avid chess player, he is known for cleverly moving his coins to score a win. He has already emerged the sole promoter of ICL having acquired the stakes of other major investors who formed part of the promoter group. In the first round of consolidation which took place in 2005 and 2006, the company saw the exit of Sanmar group which was the co-promoter.
That time, Mr Srinivasan, along with his brother Mr N Ramachandran bought out brothers, N Sankar and N Kumar of Sanmar group.
The second and final round of consolidation of promoter holding in ICL took place in August 2009, when Srinivasan acquired the stake of his brother Mr N Ramachandran, who was its Executive director. He had quit the board and no longer part of the promoter group.
It did not result in any change in the total promoter holding. Mr Srinivasan emerged as the sole promoter of the company, holding over 28% stake. The balance stake is held by institutions and the public. Mr Srinivasan's daughter, Mrs. Rupa Gurunath is a whole time director of the company. ICL has moved over to its own premises in Chennai. It was acquired from ICICI Bank.
"When you have to survive, you will find a way to survive," he used to say pointing that victory and defeat are two sides of the same coin. His passion for the three C's -- cement, cricket and credibility -- has helped him zoom beyond his peers even in the face of the most critical setbacks.
In a state which is known for business-politics nexus and rivalries, Srinivasan knew how to strike a balance. He would say, "When I faced the worst political ambush (during the AIADMK regime in 2001-06), I had accepted it as part of my life. No B-School will teach you on political management. You have to only deal with it".
True to his style, he quietly worked with the hostile AIADMK Government and got the dual ST scrapped during the regime itself. In any case, it would have gone with the introduction of VAT by the successive DMK Government which came to power in May 2006.
On whether family businesses are better run as compared to professionally managed ones, the avid golfer, with an impressive handicap of nine, said "when a person from the family runs the business; he will think business 24/7. Our view is that family-run professionally managed business is always a winning combination". NS is known for taking care of his employees, both in good and bad times. It is no surprise that he has a dedicated team working for long in the company.
NS is known for his sense of humour and deftly handling tough questions from media. He is known for meeting the media during every quarter. He did not duck them even when ICL was in the red. I used to wonder how he is able to handle multiple tasks. Perhaps, it stemmed from his art of time management. He was steering industry bodies like CMA, AIEO, MCCI. He avoided becoming FICCI president in order to focus on expanding his cement business. But, he has been supporting the activities of industry bodies. I sincerely pray Almighty for his leading a healthy life for long, continued prosperity of ICL family and his service to the society at large.
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