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The rise, fall and rise of India Cements
India Cements Ltd. (ICL) emerged as the largest cement company of the southern region. Decontrol of cement distribution and prices was a boon.
The boom in the cement industry helped Srinivasan to increase his clout in the Board of Control of Cricket in India(BCCI), become its President and also promote the Chennai Super Kings.

It was conceived by S N Sankaralinga Iyer,  an indigenous banker of Kallidaikurichi in southern Tamil Nadu. ICL was promoted by the Indo-Commercial Bank run by Iyer who recruited T.S Narayanaswami , a brilliant young man. TSN joined hands with SNS and his family and set-up ICL at Thazhaiyuthu in Tirunelveli district in southern Tamil Nadu. The rich limestone deposit available in that area was the base on which the project took shape. The Sankar brand cement became popular in quick time and the operations expanded further at a second unit at Sankari near Salem. The dynamic team for TSN,  K S Narayanan and his brothers worked for the rapid growth of ICL that evolved as the largest cement producer of this region.

The foray into chemicals and plastics was a calculated and studied move  of TSN. The scions of the two promoter families,  Sankar and Srinivasan were sent to Chicago to pursue a masters course in chemical technology at the Illinois Institute of Technology. Both did well in studies and Chemplast evolved as a strong company producing PVC from agricultural base (molasses). The group also acquired Mettur Chemicals and Industrial Corporation Limited (MCIC) that produced the vital chlor alkali chemicals adjacent to the Chemplast plant. Under the brilliant chemical technologist R V Ramani, the MCIC  also set up a facility to produce solar photovoltaic cells.


The  fall and rise of ICL...

However, with strict control over production and price of cement, profits of ICL were modest. The demise of TSN in 1968 also impacted severely on effectively managing this pioneering enterprise. Differences between the younger generations of the original promoters, N Sankar (son of K S Narayanan) and N Srinivasan (son of TSN) and the major shareholding vested with financial institutions further contributed to the decline and  led to the FIs assuming control. In the 1970s T M Thomas, who retired as General

Manager, Southern Railway, was appointed by the FIs as the Managing Director of ICL.

In an extensive interview to IE, Thomas pointed to several instances of nepotism and not-so-fair management practices indulged in  by the promoter families that depressed profitability. He worked to correct  these and helped ICL return to profitability.

Look at the financial picture of the then company:  at the end 31 March 1985, capital was Rs 490 lakh, reserves  and surplus  Rs 138 lakh, loans Rs 924 lakh.  Profit before tax Rs 9 lakh, In the previous two years the company reported losses and did not declare any dividend. Production during the year 1981-82 was 1.25 million tonnes. The price of cement then  was Rs.28 per bag of 50 kg.

With the promoters’ shareholding modest and with financial institutions having majority control,  ICL was a sitting duck for acquisition. ITC Ltd,  keen to diversify rapidly into new businesses and reduce the share of its  cigarette business, successfully negotiated with FIs and took control of ICL.

The promoters’ family appealed to R Venkataraman,(RV)  then President of India.  RV, as Tamil Nadu  Minister of Industry, helped dozens of new generation entrepreneurs to set up industrial units during the 1950s and the 1960s  and also to  expand into new products and services. He advised the warring factions agree to a compromise formula and helped restore ownership to the original promoters.

In the settlement Sankar and family opted to keep the more flourishing Chemplast portion of the group’s businesses and Srinivasan and family were given control of ICL.  

The settlement between Sankar and Srinivasan appeared quite propitious for the latter. Shakespeare’s prophetic reference to the tide in the affairs of man was well - proved again. The decontrol of cement distribution and prices in the late 1980s followed quickly by the 1991 liberalisation that ended controls, licences, permits and quotas and the close rapport that Srinivasan built with the DMK’s Murasoli Maran resulted in the company reaching great heights in terms of growth and profits.

The sustained boom in the construction sector over the last 15 years directly benefited the cement industry. Srinivasan not merely consolidated his hold but engaged in a spree of acquisitions and expanded the ICL empire. He bought out the shares of his sibling for a handsome price. ICL is part of the six cement companies that attracted the attention of the Competitiveness Council which imposed a hefty fine for cartelisation.

The newly won prosperity helped Srinivasan to increase his clout in the Board of Control of Cricket in India(BCCI), becoming its President and also promoted the Chennai Super Kings. The Kamadhenu of cement business could make him afford the extensive demands in time and money made by BCCI.

A typical Chennai businessman…

Srinivasan shares the trait of the typical southern business leader reserved, not quite gregarious, exclusive and media-shy. But he has a very valid point in charging  a  powerful northern lobby out to harm his interests. This is the direct result of two factors 1. The nature of the Tamil society which is divisive and which does not believe in collective support for the state identity. This in contrast to Kerala or Bengal where, despite differences in ideology, there is a support for a state icon, leader or celebrity.

Whether journalists, business leaders, film personalities or academics, the Tamil society is indifferent to recognising brilliance in its own groups. In the orchestrated campaign by the television medium for days,  Srinivasan did not get any support from the state, sadly not even from fellow-industrialists. Of course the state political leadership has its own concerns and agenda and has never been too much bothered with such issues. But has one witnessed any support extended by TN’s business community? Or sections of media? Or the bureaucracy? Or sports bodies?


The mortification of Malcolm

I remember one of the tallest Tamilians,  Malcolm S. Adiseshiah, also  suffering such a neglect. For two decades MSA strode  like a colossus over the  international arena: as Deputy Director General of UNESCO, he liberally aided dozens of nations newly becoming independent  in Asia, Africa and Latin America for education and culture. He was decorated in close to fifty countries with honorary doctorates. When the opportunity came for him to become the Director

General, he received little support from his country, from his state. Delhi reorganised its bureaucrats and political leaders; Tamil Nadu just did not know much about MSA or his work. The DMK leadership, just

gaining power, knew even less. MSA had the mortification of seconding a French bureaucrat who worked under him to succeed as DG.


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IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
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