Registered with the Registrar of Newspapers for India under R.N.I 53640/91
Vol. XXXIII No. 1, April 16-30, 2023
In the pre-liberalisation days, there were many Chennai-based Davids who were ready to take on multinational Goliaths. Cutfast Abrasives promoted by Chennai technocrat U. Mohan Rao was one of them. Abrasives, which are essential for engineering industries, were manufactured by three multinationals – Grindwell Norton, John Oakely Mohan and Chennai based Carborundum Universal, part of the Murugappa Group. Abrasives are very important intermediate materials for the engineering industry.
A chemical engineer working for Carborundum, Mohan Rao felt the urge to strike out on his own. He set up Cutfast in 1967 with help from family and friends as well as a bank loan. His investment then was not even Rs. 10 lakhs. Cutfast went into production in 1968 and ended its first year with a turnover of Rs 20 lakhs. It was also able to make a small profit. Cutfast was the first abrasives factory to use totally indigenous machinery. This was a big achievement in those import substitution days. They ensured that whatever they designed was adequate for the levels of production they attempted. Those were really simple, gentle times!
Mohan Rao did not want to take on the MNCs. He felt that his best bet would be to specialise, and so he chose abrasive belts. His choice proved to be correct and it brought him success. Marketing played an important role in Cutfast’s success. One of Mohan Rao’s friends R. Subbaraman invested in his venture. He had distributed abrasives in the South for almost thirty years. His customer list included almost 3,000 big, medium, and small customers. Very soon, most of the majors from the automobile industry like Telco, Ashok Leyland, M&M and the TVS Group became Cutfast customers.
Mohan Rao did not go after spectacular growth. True to the South Indian mindset, he wanted it to be steady with no major upheavals. He followed a conservative dividend policy, ploughed back a substantial amount of profits, and relied on bank loans for expansion.
By 1972, Cutfast had had respectable growth and become a medium-level company. Mohan Rao also started another unit to manufacture grinding wheels. Here again, he was taking on another multinational, Grindwell Norton. His major problem now was to get raw materials. What he needed was manufactured by his giant rivals, Carborundum and Grindwell. So Mohan Rao found himself in a bind. He said then, “Our dependence on these two was so much, that we felt that unless we remedied the situation, we could not survive.” Cutfast had to manufacture at least one of the raw materials on its own. A new company, Cutfast Grains Private Limited, was started in 1980 in Gujarat. White aluminium oxide, which is made from bauxite, was plentifully available there. The state government also did not allow the export of raw material.
The sourcing of raw material from different companies was causing a lot of problems. Mohan Rao wanted to manufacture some of the raw materials himself. To effect integration, Mohan Rao started his fourth company, Cutfast Polymers, for the manufacture of resins and varnishes. He also started experimenting with several products.
The 80s and 90s were not very good for these pioneering manufacturers who believed in indigenisation. Size started to matter. With the opening up of the economy, only the larger manufacturers survived.
Cutfast ended up selling out to the Murugappa Group, its former rivals. But it will always remain a part of Chennai’s business history.