MUMBAI, March 22: Time has an uncanny way of turning drawbacks into advantages. Thanks to the prevalent Rent Control Act that could effectively make landlords of tenants, all doors were closed to R Nandakumar two decades back when he went looking for shop hunting for his proprietorial venture. He was consequently forced to raise money to buy working premises.Today, when the industrial climate dampens domestic manufacturing ardour and competing MNCs snap at its heels, Chemtrol Engineering Pvt Ltd finds that its 11 real estate holdings have turned into valuable assets.
That, however, is news on a more cheerful note. Running a business with a human face in the face of globalisation has entailed diversification and innovative strategising to survive. The company which recorded a net profit of Rs 78.88 lakh for 1996-97 began as a one-man marketing show in 1975 investing Rs 2,500 in table space in Colaba. "Even then it was difficult for a newcomer to get office space or a telephone."
As a chemical engineerfrom Kerala, Nandakumar had worked with both a refinery and a marketing company. When offshore development got underway at Bombay High following the petrochemical boom, he struck out. "It was a controlled economy but there was still a lot of potential".
The products would be processed from Europe and the USA so Indian companies would end up paying heavily to OEM suppliers and for processing equipment from abroad. The quiet Nandakumar initially liased on a commission basis for companies marketing after sales services and also, independently, manufacture certain items. He started to scout around for excess or spare capacity in looms around what was Bombay then.
Within five years local manufacturing picked up enough to rent space in a sick factory which also had excess manpower. With one kind of collateral by his side, Nandakumar was ready to approach the bank. Banks at that time had limitations on lending for outsourcing but rentals were different and they were ready to finance bill discounting on stocksand bill purchases.
By 1980, Nandakumar had hired and then bought a factory in Taloja and was ready for a multifaceted manufacturing and marketing expansion related to hydrochemicals, petrochemicals, fertiliser and refinery. "Cost of manufacturing was now controlled, also if there was a recession in one area, then business in the other picked up". In 1981 the concern became private limited. Business growth was uphill but rapid. The company set up a huge facility in Andheri, entered a new collaboration in Goa which then qualified for central subsidies as a Union Territory (no sales tax for 10 years as an employment generating unit) and invested in foundry casting with a license from the USA.
"We saved the country a lot of foreign exchange," recalls this CMD with pleasure. Foreign consultants would charge a $1,000 per day for eight hours, plus all expenses. Chemtrol charged Rs 4,000 - 5,000 for the entire consultation. "We catalysed resources, gave expertise, provided after sales services. We had creditlimits of over Rs 10 crore with Central Bank of India and were earning foreign exchange income worth Rs 2 crore."
Management services and software development were added on through one of the largest systems integration in the country. Their clients for pollution monitoring have included the Mangalore Refinery and Maharashtra Pollution Control Board (which gave seven orders in ambient gas).
With a forest conservator for a father, Nandakumar was the only sibling to test entreprunerial waters. Today he has tie-ups with 18 overseas companies, in marketing, sales and start-ups, with the stress on economic operations and effective control on spending."
The organisation encourages long-term commitment from employees. "There is work satisfaction and commensurate compensation. We lose people only to the Middle East where salaries are higher, and that too only in marketing."
"When we are not highly automated but also employment provider, there is bound to be some inefficiency but we don't want to displace theworkforce," he says gently. No wonder, then when bonuses were slim last year, not many complained.
Snags are there in the shape of more expensive finance and domestic marketing costs, import content, a volatile rupee and partial integration of Indian economy to world where a fixed contract for engineering is adversely affected by sudden fluctuations. "We have to work on a fixed cost contract basis and compete internationally for the contracts." Still today, Chemtrol has 11 properties and the accent is on instrumentation, consumer and petrochemicals and lumpsum turnkey projects in the UK, the two Koreas and Europe.
As he says with a homespun pithiness, "You are waitlisted only till the train starts, once it leaves the station you take your chances on it." Or just look for openings and get a foot in through the door.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
