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Vol. XXXIII No. 17, December 16-31, 2023

S. Venkitaramanan – The Turnaround Man

-- by Sushila Ravindranath


S Venkitaramanan an IAS officer, who passed away recently, was a legendary figure who held many top positions in government. He was Finance secretary at the centre (also at his home state in Tamil Nadu) and the governor of the Reserve Bank of India among other things. In Chennai he will always be remembered as the man who turned around the fertiliser giant Spic (Southern Petro Chemicals Industries Corporation).

Established in 1969, Spic was the first large fertiliser factory to be set up in Tamil Nadu.

Venkitaramanan addressing a Spic AGM with M.A. Chidambaram and A.C. Muthiah seated to his left.

When Venkitaramanan was chairman Tamil Nadu Industries Development Corporation (TIDCO), he was very keen on bringing a major fertiliser project to Tamil Nadu. Not many local industrialists were willing to enter this industry which was then heavily controlled by the government. Venkitaramanan managed to persuade the M A Chidambaram group to put up a fertiliser plant. It was going to be the largest in Asia. Unfortunately nothing went right for Spic from the beginning, starting with unanticipated cost overruns.

SPIC aerial view.

Once commissioned, there were a lot of teething troubles. Spic was cleared for fuel oil which subsequent to the oil price hike had become uneconomical. The management tried to get naphtha instead whose price had also shot up. Around this time the government’ s fertiliser price policy also worked against newer plants like Spic. By 1977, Spic was teetering on all fronts – production, marketing, and distribution. That is when A.C. Muthiah, the managing director, picked up the phone and requested Venkitaramanan for help. Being a joint sector project, it was easy for Venkitaramanan’s appointment as Chief Executive of Spic to be cleared. He started work on a war footing. The turnaround started towards the end of 1977.

To begin with, Venkitaramanan and his team worked out a financial relief package for Spic and persuaded the financial institutions and banks to accept it. It consisted of rescheduling of repayments, accumulated interest being funded or being partly written off, a reduction in the rate of interest on long term loans, and other measures usually given to sick units. This gave the company immediate relief. By 1977, the government introduced the retention price scheme which changed the fortunes of fertiliser companies. However it needed Venkitaramanan’s intervention to make this scheme work in favour of loss-making companies like Spic. To get the benefits of financial packages and the retention price scheme, the company had to step up production. Therefore, during the initial days of the turnaround he made sure all the focus was on production .

Venkitaramanan made investments in key areas to ensure capacity utilisation which under retention price formula had become crucial to make profits in fertiliser industry. One of the steps taken was to put up a special facility to import ammonia and phosphoric acid at the Tuticorin port. Under Venkitaramanan’s guidance many transportation and distribution problems were solved. He brought in consultants from many fields. Another one of his major contributions was in human resource management. He managed to evolve an industrial culture in a joint sector organisation consisting of both public sector and private sector employees.

Venkitaramanan left Spic in 1983 because of his appointment as secretary to the department of power and subsequently finance at a crucial moment in the centre. He was a man of many achievements but the turnaround of Spic would always be one of the high points of his career.

He left behind an organisation which had become dynamic, quick to grasp opportunities and able to withstand crises. The subsequent history of the company had nothing to do with him and does not merit inclusion here.

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