Shashi Ruia: Tribute

 

Goodbye Skipper!

By Shivanand Kanavi

(https://www.rediff.com/business/special/shashi-ruia-goodbye-skipper/20241129.htm? )

'He asserted in his usual jovial style that he was not an MBA like his audience at IIM-Ahmedabad but perhaps had an even better business degree: MBB'.
'He went on to explain to his perplexed, blue chip B-School audience that MBB stood for "Marwadi by birth"!'

Shivanand Kanavi salutes Shashi Ruia, co-founder of the Essar group who passed into the ages on November 25, 2024 in Mumbai.

I met Shashi Ruia for the first time 25 years ago when I was working on a report on the Essar Group for Business India magazine.

Before meeting him, I did my homework -- going through company balance sheets, meeting various financial and industry analysts, bankers and Essar's senior executives as well as business rivals.

Prior to this assignment, I knew very little about the group. I had visited the DRI based steel plant in Hazira and written a piece on their excellence and innovation in a new section in Business India called 'Manufacturing' created to highlight good manufacturing stories.

My background was in physics and hence I had largely been doing stories on high tech and related businesses and not delved into steel, oil and gas, petroleum refining, telecom, infrastructure or shipping.

Essar was a complex conglomerate, which had investments in all these sectors and more.

When I met him, the anxiety must have shown on my face because the main thing he did at our first meeting was put me at ease, enquire about my family and, of course, regale me with stories from his days at the Madras docks in a refreshingly informal fashion.

I had a tight schedule and I had soaked in as much as I could from all sources; from within the company and outside; from admirers as well as critics.

As the story progressed, I met the Ruias: Shashi Ruia, Ravi Ruia, Prashant Ruia and Anshuman Ruia formally.

They faced more than 42 tough questions that I had gathered by talking to critics and analysts, openly and confidently.

They opened the books of even privately held businesses to counter some of the allegations against them.

In fact, they even asked me to collect more "negative perceptions" in the market if any and come back to them for clarifications.

There was absolutely no attempt to hide or obfuscate anything that I asked for.

What I learned through this process of due diligence made me focus on the future of the group rather than the short-term troubles they had at that time.

At the end of the exercise, I felt I had done a good job and so did my boss, Ashok Advani, an Oxford educated lawyer, and a media pioneer, who is no mean business analyst himself.

Shashi Ruia (referred to as SNR by most friends) was a journalist's delight and any corporate communication person's nightmare!

Once you gained his confidence the insights you gained about how Indian big business works, no doubt generously sprinkled with strictly "off the record" candid anecdotes, were delightful grist to the mill of a business journalist like me.

SNR's quick financial analysis, done on the back of the envelope, without any recourse to elaborate spread sheets, were remarkably accurate in summarising facts and coming up with projections.

In an apocryphal story, he asserted in his usual jovial style that he was not an MBA like his audience at IIM-Ahmedabad but perhaps had an even better business degree: MBB.

He went on to explain to his perplexed, blue chip B-School audience that MBB stood for "Marwadi by birth"!

The late '90s were perhaps the most difficult times the group has faced so far.

But I was impressed by SNR's calm, by his optimism and child-like enthusiasm for new ventures.

I came to know that his great pleasure in childhood was to accompany his father to the family's Shekhawati Gaddhi in Zaveri Bazaar, south Mumbai, to see his elders do business.

His curiosity; readiness to start at the bottom of the ladder and learn the ropes of banking, commodity trading, even international trade and coastal shipping at the ripe old age of 10 showed him as a child prodigy of sorts.

It also explained his child-like enthusiasm in new ventures in later years.

Around the same time he also learnt the ropes of the chemical and pharma business at the family owned factory in Vile Parle, north west Mumbai.

But he was versatile enough to assemble perhaps India's first batch of air conditioners from a German engineer employed by his family.

I remember that there were many who advised him to sell out his telecom business in the dire straits of 1997-1998 but he held on doggedly.

When Vodafone valued Essar's portion in Hutch-Essar at over $5 billion a few years later prior to acquiring it, he stood vindicated.

He was a man who paid attention to detail and loved to be at project sites.

As every employee in Essar pretty soon found out the best place to meet the Chairman was not in the swanky group HQ at Mahalaxmi, south central Mumbai, but on the dusty sites; be they highway and pipeline projects or steel mills and factory townships.

He visited them regularly and enjoyed engaging all his staff in his walkabout style of management.

At the Hazira steel plant where he used to often spend his Sundays, I am told the staffers called their Sunday "Shashiwar"!

Back in the late 1950s, the family had migrated to Madras from Bombay to attempt a fresh start in business.

Suddenly his father passed away and SNR gave up an engineering education and started his first independent business venture.

He started with an engineering fabrication unit. He was very proud when he got India's perhaps first car AC unit and fitted it in a car in Madras.

When the Madras Port Trust started giving out tenders for dredging and for constructing breakwaters, SNR quickly saw a business opportunity and ventured into construction, dredging etc.

It then suddenly led to a foray into shipping when an opportunity presented itself in far away Goa.

He was a great people person. His easy going conversations with his staff, remembering every detail of their families, their travails and triumphs, made him a much loved patriarch.

In fact it is not uncommon to see many employees being long serving staffers and in several cases the second generation of his early associates.

His exchange of pleasantries with one and all, be they drivers, personal assistants, executives or top notch secretaries to the Government of India; often breaking into fluent dockyard Tamil if they were from Tamil Nadu, disarmed everyone.

My Business India cover story 25 years ago ended with a reference to the Skipper of the Ship Essar -- Shashi Ruia: 'He could retire, handing the business over to the younger ones, and take to golf at the Willingdon Club next door and improve his present handicap.

'But he will have none of it -- his eyes are set on the choppy Arabian Sea and, like a true skipper, he assures you that the rough seas will pass.'

Goodbye Skipper!

------------------------------------------

Shivanand Kanavi, a frequent contributor to Rediff.com, is a theoretical physicist, business journalist and former VP at TCS.
He has authored the award winning book Sand to Silicon: The Amazing Story Of Digital Technology (Tata McGraw Hill, 2004, Rupa Books 2007) and edited Research by Design: Innovation and TCS (Rupa Books 2007).

Shivanand Kanavi, a frequent contributor to Rediff.com, is a theoretical physicist, business journalist and former VP at TCS.
He has authored the award winning book Sand to Silicon: The Amazing Story Of Digital Rechnology (Tata McGraw Hill, 2004, Rupa Books 2007) and edited Research by Design: Innovation and TCS (Rupa Books 2007).

Interview Dr Anil Kakodkar Part 2

 

'Nuclear Has To Get Into Achche Din'

By SHIVANAND KANAVI

May 20, 2024 09:58 IST

(appeared in : https://www.rediff.com/news/interview/dr-anil-kakodkar-nuclear-has-to-get-into-achche-din/20240520.htm )

'Chinese are going bang, bang, bang building 30-35 reactors.'

'We should announce a programme of 50 new reactors and show that we mean business on the ground and not just announcements.'

Dr Anil Kakodkar, former chairman of the Atomic Energy Commission, played a key role in India concluding a civilian nuclear agreement with the United States.

"India is a large enough country and nuclear power makes business sense. If you invest in nuclear, it will pay back," Dr Kakodkar tells Shivanand Kanavi in the concluding part of an exclusive interview.

( Part 1 of the Interview: https://reflections-shivanand.blogspot.com/2024/05/interview-dr-anil-kakodkar-part-1.html )

Shivanand Kanavi: What is a high-temperature nuclear reactor?

Anil Kakodkar : Well, it can go easily beyond 1,000 degrees Celsius. You can get super-heated steam.

You can get high-temperature helium and run a gas power conversion cycle.

You can have a system where the molten sodium or potassium salt as the heat transfer medium. There are many variations of that. The Chinese HTR is a helium-cooled system.

What is the reason for over a decade-long delay in our Prototype Fast Breeder Reactor at Kalpakkam? Are we rethinking design?

No, they are not rethinking design, but they are testing all systems carefully since we are using liquid metallic sodium for heat transfer.

When they were commissioning the equipment they found a lot of issues that had to be fixed in components and subsystems. Fixing that took nearly a decade. But now it's all checked out and should go operational in a few months and that will be a landmark in our nuclear programme!

Who else has been successful in developing Fast Breeder Reactor technology?

The Russians are running a 600 MW and an 800 MW reactor. Fast Breeder Reactors are Gen4, but the French and Japanese have stopped working on it. The British and Americans are also not pursuing it. But the Chinese are certainly interested in Fast Breeder Reactors.

Are the Russians sharing experience and data or anything like that with us?

There is an international working group on Fast Breeder Reactors and India is a member there.

To some extent they are sharing information and that exchange is valuable. They don't tell everything, but it is useful.

The Chinese are also building a lot of reactors.

Yes. They are going bang, bang, bang. Building 30-35.

It's good that we have now 10 under construction in the fleet mode and all that. But our government should pick up an additional 50 reactors for construction.

Create more companies in nuclear manufacturing, construction, operation, etc. If India wants to be a developed country. In the sense that the quality of life of Indians should become comparable to a developed country's human development index etc, then our per capita energy has to rise steeply before becoming flat.

Now we are way below the global average in energy consumption. Moreover, now you have to grow with clean energy. Among the clean energy sources, nuclear is the only one which can supply base load 24X7.

Renewable doesn't provide 24x7 base load.

I would say if you build nuclear in hundreds of gigawatts scale, even then you will have to depend on fossil fuel to some extent.

So we need to add carbon capture sequestration to that fossil part. Otherwise, how do you satisfy net zero? And that is going to be very expensive so I am convinced this country has no alternative.

So one should never follow a single track. It doesn't work. You must have a diverse basket.

Whether one likes it or not, nuclear has to get into achche din. I don't see any escape from it.

What is stopping us?

Finance is certainly one of the problems, but I think the bigger problem is programme delivery.

The point is you can't be sitting and saying DAE you do this, you are not doing anything.

See, for example, how much of policy support is there for renewable energy? Where is that policy support for nuclear? These are all important things. There is a long gestation period. Interest on capital matters.

We need not wait for climate funds etc to do something within our country.

India is a large enough country and nuclear power makes business sense. If you invest in nuclear, it will pay back.

First of all, Indian politicians have not understood the criticality of nuclear. Secondly, they are completely in the dark as to what should be done.

For example, to construct a nuclear plant it takes a minimum 5 years. Sometimes it takes longer.

Now, with the kind of interest rates that are prevalent. If you start with a 100 crore project, there is an S curve for spending.

So, let us say a 100 crore project takes 5 years, let's say it gets delayed for another 5 years or 10 years. Then the 100 crores plus interest will ultimately reflect in electricity tariff.

Why it gets delayed is the first problem to attack, but secondly, you should have finance, which is a soft loan over long period.

For our bullet trains, the Japanese give zero-interest loans. You need such instruments. No external agency will fund nuclear.

Is the nuclear industry capacity OK?

Industry capacity is not a problem. Of course, you would need more vendors for an ambitious programme, but if they see a market then they can build up capacity with a time lag of one-and-a-half years to 2 years.

Industry needs to be sure that these orders are coming. I don't think there is a problem.

We should announce a programme of 50 new reactors and show that we mean business on the ground and not just announcements.

It's do-able. But whether it will happen or not, I don't know.

We have built two nuclear-powered submarines, so why not a nuclear-powered aircraft carrier?

Compared to nuclear submarines, building a reactor powering an aircraft carrier is not a big deal. But I'm sure there must be a debate whether we need more aircraft carriers.

For example, if you had asked this question 20 years ago, the answer was very emphatic, yes. Now the answer may be ambiguous.

The point is whether India has regional ambitions or global ambitions.

If you want to control only the sea around the Indian coast, then you will get one answer.

If you say I should have a presence in the South China Sea and I should have a presence in the Atlantic and things like that, then you need floating platforms of large size.

So it all depends on the overall strategic goal. You having an aircraft carrier 200 kilometres outside Mumbai doesn't make sense, you can already do everything from Mumbai.

What do you think about the future of transportation and mobility?

According to me you would start seeing heavy vehicles running on hydrogen, they will compete with diesel.

It may be a matter of just a couple of years or so.

You will start seeing that because battery-electric vehicles for cross-country traffic and heavy vehicles is not viable.

Of course, there is also talk about IC engines running on hydrogen. And that's also quite promising.

Did you see Oppenheimer?

No.

Why?

Just like that. Read a lot about it. But didn't go to watch it.

( Shivanand Kanavi is a former VP at Tata Consultancy Services and the former executive editor of Business India. The award-winning author of Sand To Silicon: The Amazing Story Of Digital Technology, he is also adjunct faculty at the National Institute of Advanced Studies, Bengaluru and frequently contributes to Rediff.com )

Photographs curated by Manisha Kotian/Rediff.com

Feature Presentation: Rajesh Alva/Rediff.com

Interview Dr Anil Kakodkar Part 1

 'US Can't Take Indians As Guinea Pigs'

By SHIVANAND KANAVI 

Last updated on: May 20, 2024 00:11 IST

'Why should we disclose classified information. to satisfy those who doubt our Hydrogen Bomb capability?'

(appeared in rediff : https://m.rediff.com/news/interview/dr-anil-kakodkar-us-cant-take-indians-as-guinea-pigs/20240506.htm )

Dr Anil Kakodkar was chairman of the Atomic Energy Commission from 2000 to 2009, during which India signed the civilian nuclear agreement with the United States. Before that, from 1996 to 2000, he was director of the Bhabha Atomic Research Centre, a period during which India conducted two nuclear tests in May 1998. 

"In my view, doubts about the success of our thermonuclear test in 1998 are raised to seek more and more information from us. No country has shared as much technical information as India. But their 'dil mange more', I sensed that game even at that time. So I concluded that getting into this 'tu tu, mein mein' is futile," Dr Kakodkar, 80, tells Shivanand Kanavi in the first of a two-part exclusive interview.

Shivanand Kanavi : Ashley Tellis, the American strategic analyst of Indian origin, suggested recently that China and America may conduct nuclear tests again and that may give a window of opportunity for India to test and modernise its nuclear arsenal and particularly its thermonuclear designs which according to him 'fizzled out' in 1998, despite Indian claims to the contrary.

What is your view about the doubts raised about thermonuclear tests in 1998 as well as a possible window for testing again?

Anil Kakodkar: In my view such doubts about the success of our thermonuclear test in 1998 are raised to seek more and more information from us.

Although in terms of publicly sharing information about nuclear tests, no country has shared as much technical information as India. But their 'dil mange more', I sensed that game even at that time. So I concluded that getting into this 'tu tu, mein mein' is futile.

I asked my colleagues, after these doubts to develop a 3-D model, to look at the rock movement consequently shock, arising out of a nuclear blast.

These movements are different from a normal blast because the strain rates are high, hence the equations to be used are not the same.

Mind you at that time, nobody had developed such a model, including in the US.

Outsiders cite the profile of a test site from satellite pictures after the test and the teleseismic data from some earthquake monitoring stations like they have in Uppasala, Sweden, etc to talk with so much confidence and create doubts about our claims.

So to call that bluff, I said. We not only developed a 3D model but also qualified by using data from Baneberry test in the US which unfortunately had vented -- leaked radiation.

Because it had vented there was an enquiry and hence a lot of data came out in the public domain.

So we used the Baneberry data and our predictions and sent a paper to a well-known US journal.

The journal referees would keep asking questions 'Ye kidhar se mila vo kidhar se mila?' It was taking time.

Then suddenly a paper appeared from the Lawrence Livermore laboratory (the main lab in the US which has been involved in nuclear weapons R&D for many decades) about a model and their calculation.

So it was clear that the referees of the journal we had sent our paper to had some connection with Lawrence Livermore.

Basically, they did not want Indians to get the credit for developing such a model first.

So we wrote to the editor, 'You are free to review for as long as you wish. Take as much time as you wish. But you have to write both the dates. The date it was communicated and the date of publication.' They were honest enough, so even though it took two years for them to accept it they did publish the date we had sent the paper for publication correctly.

I'm just telling you the politics and the mindset, technical people are not without these afflictions (laughs).

That was to establish that we have that kind of modeling and computational capability.

Then we said that now use that code which we can claim is qualified and do a lot of numerical experiments.

I detonate something in a loose soil, in a cavity etc and what kind of teleseismic signal will I get? But they sit in Uppasala or somewhere and say it was 5 kilo ton and not 15 kilo ton etc arbitrarily and confidently.

We published to shut their mouth. Then the question was the profile of the crater on the ground at Pokharan.

So let us calculate that again, but we cannot publish a paper because we can't say the depth of placement and other classified data.

So we just calculated the contour, for both the fission and the fusion thing. And showed that it matches with what is there on the ground!

But why this curiosity? They think we have innovated something and want more disclosure?

Well, that could be one reason, but also many people are making a living out of this.

That's okay, nothing wrong with that. So I refuse to get into that debate.

As for a window to test again, let's see when it appears, the country can decide.

I have nothing to do with it anymore. So that question of India testing again according to me is a non question.

Does our nuclear liability law need a change? There were some complaints when it was passed at that time. But in a private conversation with me recently you said 'it's sui generis and let others use it as a model'! So what is the issue?

The nuclear liability framework evolved in the US. Its objective was to protect its nuclear industry.

So the so-called standard template is with that in mind.

Now we also knew that. Now that we were talking about civil nuclear cooperation.

We had to develop a nuclear liability framework, so we have got some people to study these issues, including at the National Law School in Bengaluru, etc.

Then around that time, the Bhopal Union Carbide court decision came.

Mr Warren Anderson, CEO of Union Carbide, was nowhere to be seen and the mood in our Parliament was 'These Americans cannot be trusted. How do you protect our people?' So that is the genesis of our nuclear liability framework.

So we tightened the suppliers' liability part.

The point is, if you are in the process of making some law, you want to make it tighter.

I did say at that time some of the changes we were doing are not consistent with the international framework.

But that's past. Now our Parliament has passed it.

So I started telling the Americans, 'look bhaiya, for you American laws are supreme, for me Indian laws are supreme.'

Everything can be discussed till the law is passed, but once it's passed we have to follow that. That's all.

Moreover, why should we follow the American pattern? Because whether it is liability connected with any airplane crash etc, an American life is always valued at a much higher level compared to others. Just because the fellow has more money, his life is more precious! Somebody who has no earnings you will say he can die like a dog. This is not correct.

So now I maintain that perhaps in terms of protecting the public, our law is superior. Perhaps that should become the common template for international law.

Anyway, that is only for an academic discussion. Some people are unnecessarily making it the issue.

If it is established that any mishap was because of a suppliers' fault, then they should compensate, and moreover, there is a due process of establishing fault or refuting.

We also have an insurance mechanism now.

Opening up international nuclear cooperation was an important thing. And we have complied with every requirement of that.

Their lawyers can always find a solution if they want. I don't give too much importance to that. It's their problem. They will sort it out. They can't take Indians as guinea pigs.

Has our nuclear liability law become, an obstacle in negotiating nuclear reactors with either Areva (France) other Western companies or Rosatom (Russia)?

If you ask them, they will say yes. But the real obstacle is Westerners' costs are too high.

Once the price part is sorted out, the deals will go through.

We sorted it out with the Russians! Western companies are hiding the fact that their costs are high and they still want Indians to buy their reactors. Indians say, 'First you bring your cost down, then we buy'. We don't want another Enron to happen!

The Prototype Fast Breeder Reactor representing the second stage of the Indian nuclear programme has been delayed by about 10 years. In one of your public lectures, you talked about the number of papers published on Fast Breeder Reactors, Thorium R&D, etc, and had claimed that we are at the cutting edge in all these things. Is that still true R&D-wise?

Yes. R&D is going on. We need to get into a project mode as far as our new design of Advanced Heavy Water Reactor (AHWR) in 2005 (external link) SMR (Small Modular Reactor) has become a buzzword today, but our 300 MW AHWR could do all that and maybe 20 years earlier.

We didn't properly project AHWR's safety aspects etc. that's a different story. After all, the purpose of SMR is to be able to locate anywhere safely.

Recently there was an announcement about a 4th generation nuclear reactor from China. Can you please explain what is this 3rd generation and 4th generation in safety terms?

These are terminologies that came essentially around the first decade of the 21st century.

Many countries started realising that nuclear power has stagnated, so what are the barriers to growth and how to overcome them? They said, 'Let us create systems that are safe, guarantee sustainability, do not create waste management issues etc.'

That was much before the Fukushima accident in Japan in 2011. Japan was also talking about all new systems and their nuclear industry had a large number of variants of different designs.

The Germans and French were also involved at that time, though the Germans withdrew later.

So they created what is known as the Generation 4 International Forum (GIF). They offered us also, that India could also be a part of this.

I was sceptical about it because there are IPR issues and several countries cannot develop new technology together smoothly. Now GIF is practically extinct.

I was quite sure that we could do it ourselves. So we went ahead with our AHWR design and R&D.

Today our AHWR would qualify for generation 4. Way back we had asked the Russians to upgrade the Kudankulam reactors and you can now call them Generation 3 Plus.

Our own 700-megawatt units at Kakrapar (near Surat) and others under construction are also generation 3 Plus.

The Chinese generation 4 is of a much earlier origin. They have been working on high-temperature reactors which can be one of the generation 4 systems.

A lot of money has been spent, but others are only talking. The Chinese have been pursuing that system much before GIF came into existence.

The Chinese are not a part of GIF. But today, that is the only generation 4 system.

Part II of the Interview: 'Nuclear Has To Get Into Achche Din'

(https://www.rediff.com/news/interview/dr-anil-kakodkar-nuclear-has-to-get-into-achche-din/20240520.htm )

( Shivanand Kanavi is a former VP at Tata Consultancy Services and former executive editor of Business India. The award-winning author of Sand To Silicon: The Amazing Story Of Digital Technology is also adjunct faculty at the National Institute of Advanced Studies, Bengaluru and frequently contributes to Rediff. )

Photographs curated by Manisha Kotian/Rediff.com

Feature Presentation: Rajesh Alva/Rediff.com

Interview: Ratan Tata on Tata Steel (July 2001)

“Given right incentives, India can be a steel supplier to the world”--Ratan Tata

My first conversation with Ratan Tata was while doing a cover story on Tata Steel for Business India, (July 23-Aug 5, 2001). Excerpts of which are reproduced below. The link to the story is also below. Tata Steel had just finished major modernisation of its Blast Furnace and had commissioned a brand new Cold Rolling Mill in collaboration with the Japanese giant Nippon Steel. And the veteran metallurgist and MD, Dr J J Irani was retiring and B Muthuraman was on the verge of taking over the leadership in 2001.

What impressed me about Ratan Tata was his straight talking and down to earth approach. When I dangled a bait in the form of a question regarding a claim by Tata Steel's PR in the media which I knew to be false or a "conditional truth". He immediately concurred with me that the claim was questionable and he has asked them to redo their calculations and show him. Very few business leaders are self critical or circumspect about superlative claims by their PR ! The full story on Tata Steel is here:

https://reflections-shivanand.blogspot.com/2007/08/tata-steel-renaissance.html

In a free-wheeling hour-long interview, Tata group chairman Ratan Tata spoke to Shivanand Kanavi ( July 2001) about the challenges faced at Tisco. Excerpts:

Q How do you look at your nine years as chairman of Tata Steel?

When I became the chairman, Tata Steel had just come out of the administered price regime where price increases were simply passed on to the consumer. The month I took over there was a crisis because freight equalisation had been discontinued and we were adversely affected since the major markets were in the south and the west. Tata Steel had come out of a seller’s market and hadn’t really oriented itself to the customer.

We set up two task forces, one to look at realisation and the other to look at costs, both of which were headed by Jamshed Irani. They went about looking at issues in a real hard way. We made some progress on both those scores. We started benchmarking ourselves with the best of the breed in the world. That really paid off, in terms of keeping great pressure on the level of our costs.

We also made a decision not to expand but modernise our facilities, and to move into flat products, which we saw as the growth area. We went through some difficult years in terms of cash flow and liquidity as we increased our levels of borrowings to see the various phases of modernisation through. Finally, the hot rolled mill and subsequently the cold rolled mill came into being. For a period of time, Tata Steel did not look hot to investors and analysts until we moved to the last phase of what we were doing.

The leadership in Jamshedpur has had a tremendous role to play in what was achieved. Jamshed Irani and his team have resolutely gone about making this transition, with no pulls and pressures that it should have been done in another way.

I think the only distraction would have been the view that Tata Steel should grow to 15 million tonnes, that it should be a volume producer as against a company that would be the best in its class. And perhaps, the period when one thought that Gopalpur would be the focal point of growth. I felt that growth in steel is going to be a difficult one and that we should consolidate ourselves and improve our operations before we looked at expansion.

Q What stops India from becoming the steel supplier to the world?

There are several issues. Koreans operate at 9:1 debt equity ratio, their interest rates are close to 1-2 per cent, whereas it is 18 per cent here. Tisco has had the benefit of the

Steel Development Fund, which is softer but which does not cover everything. The social costs in India and Tisco are a part of our baggage. Posco, for example, will bulldoze a plant that is obsolete and build another one in its place that is newer. We can’t do that in India. We need a MITI like approach to become supplier to the world. Here the steel industry has never been given the required incentives.

Q To build a modern company in Bihar must have been quite a challenge.

The credit has to go to a very strong community spirit in Jamshedpur. The people of Jamshedpur have a very strong sense of pride, and there is a sense of fear that it should not become like the rest. When I lived there, in the ’60s, there was a time when for Rs15,000 somebody could get killed. Finally, we had a good SP who cleaned up the place. So the rot can happen in Jamshedpur also. Tata Steel has been a fair corporate citizen, it has given a lot to the community. It has administered not in its own self -interest, but in the broader interest of the community.

Q Don’t investors question why you give away Rs100 crore every year to Jamshedpur and surroundings?

In particular, foreign shareholders think that this is baggage we are carrying and, in a manner of speaking, it is. But if you look at the industrial harmony and so on, I don’t think you can ascribe a value to it. This is a cost you have and despite that if you are still going to be the lowest cost steel producer, then no one should mind.

Q Instead of investing in ferrochrome and titanium why don’t you acquire steel?

Within India Tata Steel has looked at some options. But we recognized that, regrettably, the steel industry does not cover the cost of capital — and this is the global situation. Therefore, you do see reductions in capacities in various parts of the world. If you have to invest thousands of crores, as we did in the modernisation of the plant, and if it doesn’t give us a return that is equal to the cost of capital, then we have destroyed shareholder value. Moreover, just because you are Tata Steel does not mean that steel can be your only growth area. In the world you have companies that started in fertilizers and now are in pharmaceuticals. Companies like Mannesman that were in steel are now in telecom.

Q There are other group companies operating in the area of telecom, then why Tata Steel?

Tata Steel has not decided to get into telecom. We said let’s parcel out various parts of the telecom activity and look at the Group as a whole being in telecom. Ideally, you would have got one consolidated telecom company in the Group. But again, shareholders say: ‘This is my money and all I have is dividend returns from the company’. So, another way to do it is, you parcel it out even though that is a less efficient way of doing it. The bits are not in competition but complement each other. Maybe one day we will merge those into one.

Q Are you looking at acquiring steel plants abroad?

We are looking at plants abroad. However, we should be sure that we can manage that extra capacity on a global basis also. You could get a huge asset at a very good price, but you might end up having surplus capacity, which will be outside India. You then have to support it in terms of foreign exchange and we do not have a foreign base to do it. So we may be cautious in looking at these plants. Our ethic also prevents us from walking away from an acquisition when it sours.

Q Did McKinsey’s advise you to dump steel?

McKinsey’s did not tell us to dump this or dump that. McKinsey’s just gave us discussion notes in various industries. They raised some serious questions regarding the steel industry and whether it destroyed shareholder value. And I must say they awakened us to the fact that we had to do much more in steel to make it an investor-attractive area of business.

Q Last year Tata Steel made the most profits in the Group after TCS.

We need to be a little circumspect. Tisco has now got two high margin plants on line. It has shed its old processes. Crucial to producing and sustaining these results is growth in demand in its user industries, like auto, white goods and construction. Even if domestic demand picks up but there is over capacity in the world then you will be faced with low cost imports.

However, there are two pluses; one is that steel is a commodity. Hence, Tata Steel has been able to go all-out in production, covering its cost and dropping its price. The other advantage is, if the Indian market got bad you could export it. In product markets like trucks or refrigerators you can’t do both these things.

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Book Review: Inside the Boardroom

 

Book Review:

Inside the Board Room- How Behaviour Trumps Rationality” 

By R Gopalakrishnan and Tulsi Jayakumar, 

Rupa Publications 2023

 

On Board

The authors of this timely book; R Gopalakrishnan with his over 55 years of experience in leading Indian Corporations in various capacities from a trainee engineer in Hindustan Lever to leadership of several boards and Tulsi Jayakumar interested in family businesses, as an academic teaching management studies, have provided us with a delightful and useful work.

As the name suggests the book deals with what happens in a board room of different types of companies; professionally managed, family owned, promoter driven, large and small enterprises.

While the owners’, promoters’ role in the business dynamics of an enterprise is also discussed the focus of the book is the role of the CEO and the independent directors on the board.

The book briefly traces the evolution of corporate India’s board room particularly in the light of Cadbury Committee recommendations in 1992 in UK and the churn that resulted in the J J Irani Committee recommending changes in the Company law in India that led to the new version of the Company Law in 2005.

The Cadbury Committee had recommended that companies voluntarily accept: separation of roles of chairman and CEO; a majority in the board of independent directors; non-executive directors to be in the majority on the remuneration committee and playing active role in the audit committee. Though it was a UK focused report it had great influence on the evolution of corporate governance internationally.

Even in India it led later to the introduction of independent directors in all public companies, though not a majority; awareness about women in board rooms; need for diversity among independent directors in general and so on.

In this reviewer’s opinion the book is compulsory reading material not only for all corporate board members but also for management students and students aspiring to become company secretaries, compliance officers, market analysts and equity researchers etc.

The authors however continually stress that mandated or voluntarily accepted compliance standards and norms go only thus far and no further like the laws and constitutions. A more important and tricky factor in the board room, the authors point out, is behavioural. They posit that these issues play a very important role in board room dynamics.

That is what makes this slim book an interesting read and novel in approach.

They illustrate their thesis with innumerable cases studies of business failures that can be traced back to board room dynamics that stymied any course correction in time for these corporations. They draw their brief lessons; without falling into to the pitfall of merely compiling case studies in corporate governance; from the global as well as Indian corporate history.

The pages are enriched by a wide variety of stories from Enron, Worldcomm, Unilever, Lehman Brothers, Nestle, Rajat Gupta episode and dozens of others from global corporations. From the Indian corporate sector we have examples from YES Bank, Kingfisher Airlines, Ranbaxy, Satyam, Jet Airways, Tata Finance, HLL and several unnamed ones narrated anecdotally by R Gopalakrishnan.

The personal experiences and anecdotes from more than 20 company boards of which “Gopal” ( a third person short form used by R Gopalakrishnan in the book) was a part of; some as an executive director and many as an independent director, make the discussion more interesting and less a B-schoolish.

In the case of a business failure or a hint of a scam or unethical practices of a company the public opinion is almost always unmindful of explanations and excuses provided by the tainted leadership ie promoters. But the media and public make an equally searing criticism of the role of independent directors on the board, who often have impeccable credentials. “What were they doing all this time other than collecting hefty sitting fees and enjoying hospitality and other perks!” is a common refrain post facto.

Thus the question arises about the role of independent directors in the board, their fiduciary responsibility to keep in mind the overall sustained and sustainable growth of the company and the interests of minority and retail investors, whose interests they are supposed to protect at the same time not appearing to be obstructionist and perennially conservative and status-quoist on important matters in the board and so on. Easier said than done.

So the book deals at length with various tricky scenarios in the board and how independent directors should successfully navigate through them, how they should be aware of early warning signals of trouble, how they should at the same time contribute positively to the board proceedings to push for timely course correction, use their specialist knowledge for which they have been chosen to be on the board in the first place and so on.

The book provides many tips called mantras to provide an Indian touch to the discussion for all parts of the board, the leadership, the independent directors and CEO on how to carry out their fiduciary responsibilities and balance conflicting pulls and pushes.

The astute observations made by authors on behavior in board room have their reflection in fact in any group, organization, family scenarios. Thus the reader who may have nothing to do with board rooms also comes up with many a ‘aha’ moment.

Shivanand Kanavi

(Former VP TCS, Physicist, Business Journalist and Author; skanavi@gmail.com )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Review: Art & Science of Managing Public Risks

 

Talking about disaster management

BOOK REVIEW SHIVANAND KANAVI Art and Science of Managing Public Risks Author:V S Ramamurthy, Dinesh K Srivastava, Shailesh Nayak Publisher: World Scientific Publishing Pages: 412 Price: ₹ 4,015 The three authors are senior scientists. Shailesh Nayak is a geologist who was also the secretary of the Department of Earth Sciences and has been deeply involved in India´s Antarctic projects. He played a key role in rolling out, in record time, a Tsunami Warning System for the Indian Ocean Region after the 2004 tsunami. V S Ramamurthy, a nuclear scientist, has had a long innings as secretary, Department of Science and Technology and has grappled with the issue of improving communication between scientists, policy planners, media and the public to promote rational rather than kneejerk solutions to key issues in scientific policy. Dinesh K Srivastava is a distinguished nuclear physicist, former director of the ambitious Variable Energy Cyclotron in Kolkata, and is deeply interested in climate change. Ashutosh Sharma of IIT Kanpur, an Infosys Prize winner in Chemical Sciences and also a former secretary, Department of Science and Technology, has written a scholarly and lyrical preface to the book. When such senior scientists venture into public policy, policymakers would do well to listen carefully. In fact, Art and Science of Managing Public Risks should be made compulsory reading to policymakers and disaster managers. It is perhaps the most exhaustive and comprehensive compendium of disasters of various types. The authors´ concerns range over both natural and manmade disasters. For example, it talks about climate disasters, cyclones, cloudbursts, landslides, flash floods, earthquakes, volcanoes, tsunamis. It also tackles infectious diseases and epidemics such as plagues, polio, smallpox, malaria, TB, dengue, cholera, and Covid19. In industrial accidents, the book covers coal mine collapses, accidents in oil and gas fields, dam failures, transport and chemical accidents, the Bhopal gas tragedy, harm from pesticides and insecticides. The authors have also dealt with the fact that every technology developed by man so far has pros and cons when the costs and benefits are tallied over the life cycle of the project. So how should policy choices be made and why? How should the risks be communicated to policy makers and communities and through what channels and modus operandi? The authors have taken the same approach in the discussion on nuclear power and safety issues involved and with genetically modified (GM) crops and the fears and upsides, as the transgenic mustard debate has shown in an edible oil hungry India. Then there are developmental issues such as pollution, urban waste management, ewaste, biomedical waste management and so on. The book also discusses the nature of risk communication, dialogue and debate regarding policy choices. The authors conclude that the formulations of government policies are extremely vulnerable to public perceptions. Moreover, risk perceptions are highly individualistic; consequently, risk communication could be complex. The traditional forms of risk communication are often inadequate and ineffective. The authors argue that communication should be in the form of dialogue and not debate and should lead towards a consensus. Importantly, they point out that there is no alternative for governments to taking the public into confidence and empowering them with reliable information. “Humanity has always been vulnerable to a wide spectrum of public risks, such as natural disasters and infectious diseases. The recent developments in science & technology, while providing tools to manage public risks of different kinds, have also broadened the spectrum of public risks that we have to face,” they write. Across the world, they add, “governments as custodians of public good are expected to also hold the responsibility of managing public risks. With more and more countries opting for democratic forms of governance, we also see that formulation of government policies on managing public risks are highly vulnerable to public perceptions.” A classic example of differing risk perceptions from the last three decades is the GM foods. While farmers are eager to benefit from the many advantages of modern biotechnology and move on to Green Revolution 2.0, experts and nongovernmental organisations are divided in their opinions, resulting in the policy becoming a victim of procrastination at great cost to the nation. For example, Bt Cotton and Bt Brinjal have finally entered production legally or illegally; now, there is a prolonged evaluation of Dhara Mustard 11, when we are in dire need of better and more oilseed production. The authors have briefly mentioned the National Disaster Management Act and the agency created to handle disasters in India. One wishes that they had critically examined this law and made recommendations to make it more effective. (The reviewer is adjunct faculty at NIAS, Bengaluru. skanavi@gmail.com )

 

 

Book Review: Just Aspire by Ajai Chowdhry

 

 

A soft tale of hardware (appeared in Business Standard, June 21, 2023 )

In his book Just Aspire, Ajai Chowdhry tells an autobiographical tale that starts in Abbottabad, Pakistan. Nope, nothing like Zero Dark Thirty -- that 2012 Oscar and Golden Globe winner, about the US commando operation against Osama Bin Laden. This story starts with a well settled family in verdant Abbottabad in the hills near Kashmir, the starting point for many a trek into Hindu Kush and Karakoram. Mr Chowdhry´s father was a well known, well t odo lawyer, secretary of the District Congress Committee and an Urdu poet who also organised and patronised many a mushaira. The partition of the subcontinent upended the family, which had been well integrated in Abbottabad and had cultured neighbours of all communities. Arriving in Delhi as refugees from the communal violence, Chowdhry senior´s organisational skill sets and knowledge of law got him involved in the government´s refugee resettlement programme. His efforts were quickly recognised and he was absorbed in the bureaucracy and tasked to persuade some of the Rajputana princes to sign the Instrument of Accession to the Indian Union. After completing that assignment, he joined the newly formed Indian Administrative Service and was sent off to Central India as commissioner of Bundelkhand and Baghelkhand. Mr Chowdhry is naturally nostalgic about his early childhood in a large colonial bungalow fit for a sahib with a tiger cub as a pet. Eventually the Chowdhrys settled in Jabalpur. Mr Chowdhry is eloquent about his childhood, school and college days in Jabalpur. After graduating in the newly introduced electronics and telecommunication engineering, in Jabalpur Engineering College, he found he was more attracted to marketing electronics rather than working the public sector telecom organisations and joined DCM Data Products as a sales executive. That began a lifetime in marketing electronic products, starting with clunky and expensive electronic calculators. Mr Chowdhry´s hard work and ingenuity in selling these bulky machines paid off. For example, while everyone was targeting academic institutions he found that chemists in sugar mills needed a quick calculation of the sucrose content in the cane and the final sugar recovery in the production process. Persuaded by him, they found this new gadget really handy and started convincing their managements to buy them. Mr Chowdhry had spotted this opportunity and visited literally every sugar mill in rural Maharashtra to achieve his sales target. Similarly, he found that irrigation engineers in Maharashtra needed quick calculations to release water to farmers and successfully targeted them too. When PCs were two decades away and only a handful of large companies in the government and private sector could afford mainframes, these calculators, especially the programmable kind, were very useful for fairly complex and quick calculations. This reviewer used one of these DCM Data Products´s programmable calculators for tedious and complex calculations while doing research in theoretical physics at IIT Bombay in the 1970s, yielding results worthy of publishing in peer reviewed international journals of physics. Mr Chowdhry´s tales of marketing advanced tech products hold a major lesson for today´s marketing executives. If you are diligent and observant, then you can find opportunities in surprising corners and even in remote and rural India. Though he was doing well in DCM, he was bitten by the entrepreneurial bug in his 20s, which was unusual in 1976. So he struck out with his seniors and mentors, Shiv Nadar and Arjun Malhotra from DCM Data Products, to found what went on to become one of the leaders of the Indian IT industry, HCL. HCL (then known as Hindustan Computers Ltd) was then into producing and marketing hardware starting with microcomputers and then PCs and so on. Since the components and PCBs and later motherboards were not being made in India most people were importing them from Singapore. Some were accused of screwdriver technology, profiting from high protective tariffs, and some of even using the grey market. After his first assignment in selling microcomputers in Tamil Nadu, Mr Chowdhry was sent to another frontier, Singapore. Shiv Nadar of HCL had taken the bold decision to establish a unit in Singapore, named appropriately as Far East Computers to make and sell hardware there. Mr Chowdhry made that a success, spending his time gaining valuable international experience in the highly competitive markets of South East Asia. His tales of the social life of an expat in Singapore in the 1980s are charmingly narrated. In 1994, he became the chief executive officer of HCL Info Systems in India. Within a few years as telecom policy changed in 2002 making mobile telephony more lucrative, Mr Chowdhry´s long relationship with Nokia came in handy in persuading the Finnish multinational to make and sell affordable mobile phones in India. HCL took the lead in selling those phones via their marketing network. Overall, the book is a good read and the blemishes are few and far between. It lacks an index, for one and a few events are not dated. The reader will be disappointed if he expects an analysis of the history of the hardware industry in India, its challenges and the future from a veteran. The author also has a penchant for long quotations from various favourite management gurus. It may have been more exciting and instructive to young executives reading the book if he had drawn anecdotes and lessons from his own extensive marketing experience in India and abroad. The reviewer is adjunct faculty at NIAS, Bengaluru and former VP of TCS. skanavi@gmail.com BOOK REVIEW SHIVANAND KANAVI Just Aspire: Notes on Technology, Entrepreneurship & the Future Author: Ajai Chowdhry Publisher: HarperCollins Pages: 252 Price: ₹ 599