The ups and downs of Tamil Nadu’s growth

by Janaki Venkataraman

Two pages on books

I had just finished reading Sushila Ravindranath’s eminently readable book, Surge*, when my glance fell upon a headline in the day’s newspaper, ‘Venture funded idlis in your kitchen’.

“Oh, please!”, I think. I am both tickled and amazed that the ready-to-cook version of the ubiquitous South Indian breakfast food can attract investment from American venture capital firms. It brought home the truth that in the current atmosphere not only are Indian business ventures going global, they are also attracting foreign investment for what might at first sight seem innocuous enterprises, provided they are seen as fulfilling a felt consumer need.

The word ‘surge’ Sushila was as her title, means “a sudden, forward or upward movement”, a sort of irresistible rush towards a goal. ‘Sudden’,‘irresistible’, and ‘rush’ are not words that you usually associate with the business scene in Tamil Nadu. ‘Slow and steady’, ‘cautious’, and ‘conservative’, are the more likely descriptions that spring to mind. Sushila quotes from a description of the image of the Tamil businessman of the 1980s thus, “Except for Sundays, he was at the factory he owned at 7 am every morning. A daily routine inspection was a must, when he might wipe off a speck of dust from his machines. He took, perhaps, as much pride in this simple task as in conducting board meetings. In this man’s dictionary, ‘risk’ and ‘grow’ were four letter words.”

A lot has changed since, including the persona of the Tamil businessman. No one is better suited to describe this change than Sushila, former Business India correspondent and current Consulting Editor of Financial Express. She has had, for long, a ringside view of the ups and downs of business in Tamil Nadu, a good know-ledge of the players and the -sensitivity to catch the winds of change blowing over the scene. In her empathetic and comprehensive portrait of corporate Tamil Nadu, Sushila describes the slowly gathering momentum of change in the mindsets of business houses in the State, both large and small, pointing to an exciting promise of the surge to come.

Surge has twelve segments, beginning with the well-known family-run business establishments and ending with the newest arrivals on the scene. The segments are designed not only to portray the history of business in Tamil Nadu but also to explore the circumstances that are changing its face.

Despite the fact that it was largely ignored by the rest of the country, Tamil Nadu was one of the first States to industrialise, even before Liberalisation. In those times, “When one said Southern Business, one was really talking about industrialists from Tamil Nadu,” Sushila observes. “Take the automobile industry. The Murugappa group manufactured the first bicycle in the country and Enfield the first motorcycle, both in Madras. Standard Motors from Madras was the second Indian car manufacturer. Ashok Leyland established a commercial vehicle unit here.

Madras became the cluster for auto component manufacturing with groups like the TVS, Amalgamations and Rane setting up in Madras.” In the non-automotive sector, there was the TTK group that started in 1928 as an indenting agency and a trading company. Its founder, T.T. Krishnamachari left the business to become a freedom fighter and after Independence became Finance Minister in the Nehru government. This group introduced pressure cookers and condoms to the country. It is today still one of the biggest manufacturers of kitchen appliances.

Despite all this South Indian companies were perceived as lagging behind their counterparts in the North. In fact, businessmen from the North began to acquire major manufacturing companies like Ashok Leyland, Gordon Woodroffe, Spencer’s and Best and Crompton without a fight from local businessmen. It wasn’t that the latter didn’t have the money to buy. It was just that they were too cautious about what they spent it on. Even a Rs.100 crore project would have given them the jitters in those days. Obviously this wasn’t a soil from which Dhirubai Ambanis would spring.

Many predicted that with their lack of drive many of the old companies would fade away into oblivion. The fact is most of them are doing very well to this day. From corporate houses that shrank from Rs. 100 crore projects they have all now become multi-billion dollar business houses. The biggest among them are the TVS, Murugappa, Amalagamations and MRF groups. These are followed by groups like Sanmar, Rane and the Coimbatore-based ones like Lakshmi Machine Works, Elgi, PSG, Sakthi and Rajshree. For the most, part these are family-held groups, with little room for outsiders. While they have all reinvented themselves to suit the changing times, they are still fairly conservative regarding investments and diversification. And then, of course, there are always the questions about how much longer these families will hold together to run their businesses.

One group about which this question is never asked is the Murugappa group. The fifth generation has made its entry in this group. Once very conservative, they have evolved with each generation, not only to survive but to thrive. “They are a close knit family where the elder’s word is final,” observes Sushila.

The family owns 28 businesses, ranging from heavy engineering to agro-products. The group has collaborations with many international companies and operates in six continents. The younger generation have impressive educational qualifications and bolder mindsets. Despite this, it is still a very Chennai group, quiet and steady, avoiding big risk-taking. As Group Chairman, A. Vellayan says, “We never make a big play and commit big mistakes. We don’t do anything stupid and fancy. We take reasonable bets and not green field bets…”

Similarly, there is no flamboyance in the activities of the TVS group, the other large group in Chennai. So low key are they that they did not even have a big celebration for their centenary year in 2011. It was pretty much business as usual at all their offices. This was despite the fact that, individually the group’s companies are very well-known nationally and internationally. Sushila points out that it is quite likely that all automobiles manufactured globally carry one or another TVS component.

TVS’s passion for automobiles and their components began with the founder, T.V. Sundaram Iyengar, starting a passenger bus service and workshop in Madurai in 1911. All the companies are run by family members. It is not that the group does not have family feuds and labour unrest, but these are usually solved quickly and without causing harm to the group’s interests.

The Amalgamations group, once the giant presiding over the Madras business scene, and even today, a major player, had slightly different origins. Its founder, S. Anantharama-krishnan, or J, as he was known (for reasons unclear), was an employee of the British-owned Simpsons. In 1930, his employers were so impressed with his work that they took him on board as Company Secretary. He was then just 30 years old. In 1939, at J’s initiative Simpsons formed a holding company, Amalgamations Ltd. Around the same time, he set up several other enterprises. “It is part of Chennai’s corporate folk lore how J acquired Simpson’s in 1941 and W.W. Ladden, the then chairman of the company, voluntarily opted to serve under him,” writes Sushila. Since then Amalgamations has remained a strictly family owned group.

Today, the flagship company of the group, TAFE, is run by Mallika Srinivasan, J’s grand daughter and the daughter of his son, A. Sivasailam, who passed away in 2011. TAFE now exports tractors to 82 countries the world over. Asked if she aims to be ‘number one’ in the tractor market, Mallika replies quietly, “We are number one, in terms of profitability.”

Asked how difficult her job is, she responds, “Manufacturing and selling cosmetics must be as difficult as producing and selling tractors. You should enjoy what you do.”

The other Chennai-based family owned companies of note are MRF, the 15th largest tyre company in the world, India Cements, the cement industry leader in the South (its chairman, N. Srinivasan, a colourful and aggressive personality, is as well-known in cricket circles as he is in industry), the Sanmar group, that has definite niches in plastics and engineering, the Rane group that produces engine valves and steering systems, and the Ramco group that has interests in textile yarns, cement, building products, software solutions, wind energy, bio-technology and more.

(To be concluded)

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