Creating a SHE company

The Ambuja Story: How a group of ordinary men created an extraordinary company

Author: Narotam Sekhsaria

Publisher: Harper

Pages: 368

Price: Rs 699

In Sanskrit, Ambuja is the name of a girl, who is born of a lotus. This highly readable narrative is about how, when and where Gujarat Ambuja was conceived, born, and raised. The company is now an adult, aged about 40 years, and married to a Swiss. The story of the company is enriching for modern start-ups, historians of industry, and, indeed, anyone who wants to understand the DNA of entrepreneurship in India.

Cut to 1982. A 30-year-old cotton trader harbours ambitions to enter manufacturing. Manufacturing what? Well, something that would transform him from trader to an industrialist. A family well-wisher suggested that a cement plant be constructed in UP.

A chemical engineer by training, Narotam Sekhsaria possessed a passion for manufacturing, some cotton trading experience, limited capital, and zero knowledge about cement.  Accompanied by his well-wisher, whose experience —also unrelated to cement — was in distributing petroleum products and maintaining excellent networks of contacts, the young Sekhsaria arrived in UP to lobby chief minister Narayan Dutt Tiwari. The encounter was disappointing and uninspiring.

A chance encounter with the IDBI chairman threw up Gujarat as a possibly better alternative. Gujarat was pre-Modi; the state was already very investment friendly. Literally, within a few days, the “foetus” of Ambuja was conceived. After many travails of pregnancy, Gujarat Ambuja “baby” was delivered in 1986.

In his book, Mr Sekhsaria recalls the values with which he raised the baby, “I was a believer in using the best of technologies, negotiating it down to the lowest possible price and getting the best people to run it….I honestly believe that Ambuja was not built with cement or steel, but on trust, creative freedom and hard work…my personal commitment to a relatively frugal work-related lifestyle, I think, had a beneficial effect on everyone…..Gujarat Ambuja made a modest profit within the first six months of its operations, a rare feat for a cement company in those days,” according to  Mr Sekhsaria. How inspiring if all start-ups adopt their own “excellence values” for their venture, whether these, or any other appropriate values!

The book is replete with examples of the twin benefits of humility of ignorance and curiosity from passion. Since the founders of the company were no cement experts, they recruited top-class professionals. Above all, they listened to them, seriously. They had no idea of what a brand was, so they roped in Ravi Gupta of Trikaya, who taught them about branding and helped them develop Ambuja as a valuable brand. They knew nothing about capital markets and initial public offers. They took lessons and coaching from Nimesh Kampani of JM Financial. “Nimeshbhai had several rounds of meetings with us where he coached us on the path ahead, on how to organise a roadshow, and on what to say at investor meets,” Mr Sekhsaria writes.

By 2000, Tata Steel had decided to sell its cement plants. This reviewer had joined Tata by this time. Mr Sekhsaria met Jamshed Irani, who wanted to meet without any intermediaries. To Mr Sekhsaria, this was a welcome change from “an encounter in the early 1980s when Irani had given a two minute audience at Bombay House before fobbing me off on a deputy…..I was told by some industry insiders that Mr Ratan Tata admired what Ambuja had done…..One Bombay House conversation quoted was yeh marwari bhi hai,  ethical hai, efficient hai.” The Tata Steel cement plant was finally bought by the French company, Lafarge.

Subsequently Ambuja managed to buy Tata’s 14 per cent shareholding in ACC and secured two board seats in ACC. That deal became controversial in the public space and required Mr Sekhsaria to defend it energetically. By 2005, Swiss cement major, Holcim, invested in both companies. Faced with health issues, Mr Sekhsaria reluctantly sold his promoter’s shareholding in the cement business.

Under Holcim’s ownership and Mr Sekhsaria’s legacy, both ACC and Ambuja prospered for several years. Recently, media reports suggest that Holcim may exit from their Indian interests. But that would be another story.

The lesson

of how to set up a SHE —Sustainable Honest Enterprise — in India is a great story for India Inc.  For 75 years, India has struggled with how to regard and deal with Business and Enterprise. The policies, procedures, and postures have ranged from suspicion to control threatening to throttling —until liberalisation brought some change. Among the key skills required in the earlier days were networks, connections, persuasion, and advocacy. In many cases, though not for Gujarat Ambuja, kickbacks and private payments were the norm for speeding up government approvals. Gujarat Ambuja counts among the few companies that sought success through efficiency, capability, market share, and quality.

In the exploding start-up culture during the present century, the new success paradigms are visibly different. To see the contrast, read Mihir Dalal’s Big Billion Startup—The Untold Flipkart Story or T N Hari and M S Subramaniam’s Saying No to Jugaad—The Making of Big Basket. Reading these books simultaneously with The Ambuja Story, the contrast of how much change there has been for Indian enterprise crystallised through the mist.

An overarching and welcome lesson is that the basic skills of Sustainable Honest Enterprise have not changed: Efficiency, capability, market share, and quality. The Ambuja Story should encourage future entrepreneurs to believe in the mantra of SHE and patiently build world-class companies that our nation so badly needs.

The reviewer is a writer and business commentator