Breaking point

Vinay Bharat-Ram chronicles the twists and turns in DCM’s journey. Excerpts from his memoirs.

Parallel developments were catching up with DCM. The tensions between Bharat Ram and Charat Ram were moving to breaking point. Since my father was not inclined to retire, as advised by Dharma Viraji, there was a virtual cold war on between the two camps in the company. Dharma Viraji left the company in December 1982. DCM was running on autopilot, with each division minding its own affairs. There was a general belief that I was the villain of the piece since I stood behind my father in the political chess moves, and that but for me my father would have been amenable to Dharma Viraji’s persuasion. Finally, one day in the summer of 1984 my father called me to his room and confided that he was tired of the politics in the company that was dragging it down and wanted to call it a day. This sent a chill down my spine. I knew that once Charat Ram became chairman, I would be cast aside with some nondescript responsibility.

My mind worked overtime and in the next few days I came up with a plan. I suggested to my father that since he was seventy and his brother just three years younger, both should retire together and Bansi Dhar, who was fifty-five, should be made chairman and managing director. I was silent about myself, assuming that if the plan worked I would get Charat Ram’s position as managing director. My father, who was generally averse to being manoeuvred, saw in this the greater good of the company — including, I am sure, a future for his son.

The board of DCM had persons of distinction like H T Parekh, whose vision of a housing finance company was carried forward by his nephew Deepak to make it the behemoth HDFC; Pravin Chandra Gandhi, a respected Bombay businessman; and K N Atmaramani of UTI.

In the next board meeting on 28 July 1984, after all items on the agenda were disposed of, my father let the cat among the pigeons. He had a brief, one-page proposal placed before each director. It read as follows:

I have been soul-searching about the future of DCM for a long time. The future depends ultimately on effective leadership and team work. Charat and I have had a long innings and have shared both the joy and toil of managing the DCM. The time has now come when the next in line must shoulder the burden of responsibility of the company. My and Charat’s term as managing directors would expire in the beginning of the next year. I am, therefore, proposing the following:

1. Bansi be designated as chairman and managing director of the company.
2. Vinay be designated as managing director.

The board should take a decision on this matter well in advance of our retirement. I am convinced that the team of Bansi and Vinay will be most effective since both represent qualities of head and heart, which are complementary. I am making this proposal with all sincerity and seriousness for the future well-being of the DCM and I hope the board would accept it.

There was stunned silence. Then there was an explosive protest from Charat Ram whose first words were: ‘Bansi is not yet ready.’ This was followed by a muted protest from Bansi Dhar — I presume, the first ever. One of the directors had the good sense to suggest postponing the discussion to the next meeting. Once the meeting was adjourned, intense lobbying began. Bansi Dhar was closeted with one of the directors and Charat Ram with another.

In the next board meeting Charat Ram submitted a long note, pleading for just three more years to set the company right and explaining why Bansi Dhar was not yet ready for the job of chairman. Further, to support the point that I was the cause of all the financial problems, he presented his own ‘track record’ compared with mine, which showed the accumulated losses in the textile division. Bansi Dhar was ready with his own list of accomplishments, and the debate went back and forth.

My father strongly believed that the bane of DCM was the “two-MDs-based management” and that there should really be one CEO of the company. Other directors felt that “if Bansi is not ready at fifty-five, it is unlikely he will be ready at fifty-eight.”

In the meetings held on 18 and 27 October, the different viewpoints were considered, and it was decided by the board that Bansi Dhar be made CEO of the company with the designation of chairman and senior managing director, and I be made managing director. Further, that in the event of a difference of opinion between us, Bansi Dhar’s decision would be final. The minutes recorded my statement which read:

I wish to be the first to hail the new chairman & managing director with the assurance that I wholeheartedly welcome his leadership.

Charat Ram’s note of dissent was filed with no further discussion.

On 28 March 1985 Bansi Dhar’s position as chairman & senior managing director and mine as managing director were formalised with effect from 1 April 1985, the day after Bharat Ram’s and Charat Ram’s five-year terms of service expired. They were, however, elected as directors on the board of the company. Siddharth, Charat Ram’s son who had worked for eight years with Citibank, was invited to join the board and was appointed deputy managing director.

Bansi Dhar was directly responsible for the foods, fertiliser, chemicals and sugar divisions of the company, while I was responsible for textiles, engineering and the Data Products divisions as well as for reporting to the board on the performance of Shri Ram Fibres Ltd and DCM Toyota Ltd, which were subsidiaries of DCM.

* * *

The year 1988 was one of reckoning. The continued losses and negative cash flows at DCM made the financial institutions sit up and take notice. On behalf of all the institutions that had a stake in DCM, Mr Atmaramani of The Industrial Finance Corporation of India (IFCI) spoke to Bansi Dhar, Siddharth and me. He said that as representatives of the three branches of the Shri Ram family of Bharat Ram, Charat Ram and the late Murli Dhar (Bansi Dhar’s father), we should sit together and hammer out a three-way division of DCM. Bansi Dhar was already working on a plan of creating three subsidiaries. This became a starting point.

During the months that followed, we were engaged in many lengthy closed-door negotiations. Much of the horsetrading was between Bansi Dhar and Siddharth. Both laid claim to the sugar operations.

As far as I was concerned, nobody wanted Delhi Cloth Mills with its attendant legal problems; the foundry was located in a state that was in the grip of terrorism; Data Products was of no interest to either cousin; and I had no interest in sugar or chemicals. Regarding SRF and DCM Toyota, nobody could make the case that they should be outside my jurisdiction.

Nonetheless, the arguments were time-consuming and tiresome. Dr Baijal and Mantosh Sondhi were appointed arbitrators by the institutions to decide on matters we could not settle among ourselves. It is remarkable that Bharat Ram and Charat Ram preferred to keep out of negotiations and that we did not feel the need to seek the assistance of lawyers or chartered accountants.

But the protracted tensions were taking their toll on my health... I was advised bed-rest for two months.

The minutes of the board meeting of 4 November 1988 read that in the absence of Dr Vinay Bharat-Ram, who had been medically advised rest, Data Products and Engineering would be looked after by Bansi Dhar, Land Development by Siddharth, and Corporate HRD by Man Mohan.

While I was resting, we won a landmark court battle and the notice of closure of Delhi Cloth Mills was issued on 7 November 1988. Having become utterly bored and concerned about becoming too dependent on blood-pressure tablets, I decided to take control of my health. Regular walks gave way to a regimen of jogging. Three months later, I was doing sit-ups, push-ups and running a mile at least thrice a week. My medication was down to a minimum and I had never felt fitter.

By the end of 1988, the plan of creating three independent arms of DCM took shape. Bansi Dhar’s group comprised of the fertiliser, PVC, cement and rayon plant in Kota, a sugar plant in Daurala, Swatantra Bharat in Delhi and Hindon River Mills in Uttar Pradesh. My group had the soon-to-be closed Delhi Cloth Mills with its land assets, Data Products, the foundry in Ropar, the closed Hisar Textile Mills with 400 acres of land and DCM’s associate companies, SRF and DCM Toyota. Siddharth got the chemical and vegetable oil plants in Delhi as well as a sugar mill in Mawana.

Around this time Bansi Dhar’s group, the largest, was split into two, with fertilisers, PVC and cement as well as Swatantra Bharat Mills going to his brother, Shri Dhar’s family, while he retained Rayons, Daurala Sugar and Hindon River Mills.

BMC now became the nodal agency to oversee the three arms and to delink them from one another. Bansi Dhar, Siddharth and I took on the roles of chairman and managing director for the respective subsidiaries and brought into effect a board resolution that said there should be no common directors or executives. Dr Baijal, Mantosh Sondhi and Atmaramani also began to examine how each subsidiary could become financially viable and arrange for its own lines of credit.

At the board meeting of 15 April 1989 Dr Charat Ram proposed that a cross-holding of shares should be avoided for harmonious working in the future. While I agreed in principle, I felt that BMC and the board should not be involved since this was a family matter. The board accepted my caveat.

Excerpted with permission from Penguin Books India

FROM THE BRINK OF BANKRUPTCY
The DCM Story
Author: Vinay Bharat-Ram
Publisher: Penguin
Price: Rs 499