"There are no exemptions in life"

It’s a huge weight to belong to such an illustrious family — especially when your history goes back almost 400 years and your great-great-great grandfather has been a part of Akbar’s court. But we were never made to feel like we had to live up to the past. We were given complete freedom to chart our own course. It was, of course, overwhelming to see top politicians walk in, including the likes of Prime Minister Jawaharlal Nehru, but then again, we were among the top 20 industrial houses in the country. 

Growing up in that huge house, with a lush green lawn and a Chevrolet — the trappings of luxury were all there. Yet, I went to school on a cycle. My friends came from less privileged backgrounds, many lived in a one room-kitchen. And it never felt uncomfortable because the family never qualified who could be a friend. When the home-cooked food was laid out, I found a spot on the floor, just as hastily as the others and ate my fill. Maybe it was because dadaji lived a Gandhian lifestyle himself.

What a stickler for time he was! Dinner used to be served at 7 pm sharp. If you were late, you had to go hungry. I remember when Sardar Vallabhbhai Patel was invited home for dinner. He was a good friend of dadaji. When he walked in, the family was already playing bridge. In jest, Patel asked if dadaji had forgotten the dinner invitation, only to be told “Sardarbhai, it’s pretty late, it’s over.” Dinner had been wound up without the deputy PM! Shocked, he walked away without another word.

Where you stood on the personality scale, how high or low, didn’t matter to dadaji — he believed in the dignity of labour. In the afternoon, the household staff would rest for three hours. Then, if you needed tea or snacks, you had to prepare it yourself in the kitchen; the staff simply couldn’t be disturbed. The same principle worked at Arvind. The doors to his office were always open. He had no secretary because he didn’t need one. Whether you were a worker or managing director, you were free to walk in without an appointment. A man of quick decisions, sometimes he wouldn’t even offer people a seat, just send them back with solutions, in less than a minute! 

Once in a while, I would meet papa in office. As a child, I would be given a pencil and an eraser to amuse myself. But when I was about to take the pencil home, papa took it away quickly, saying it belonged to the company. I didn’t understand it then, but it was an early lesson in trusteeship. Even with something as insignificant as a pencil, I was made to differentiate between what belonged to the company and what was mine. For both my papa and dadaji, principles mattered more than anything else. Their word ranked higher than any legal agreement. An oft-repeated sentiment in the home was “Once you lose trust, it can never be gained back”.

I was a rebel, constantly going against the wishes of papa. It took me just six months to bail out of Lalbhai Dalpatbhai College of Engineering, where he sent me. I wanted to study science in St Xavier’s College but couldn’t get in. So I joined MG Science Institute instead. After two years, I finally got into Xavier’s and majored in statistics and mathematics. It was the Beatles era. Oh, how they triggered my own stint with rock music! I was in high school when my cousin exposed me to the iconic rock band and Cliff Richard. I don’t know whether I liked the music or the idea of being different, but I became a drummer. Our band was called Drifters. True to the name, we drifted apart! But what fun that was! Oh, the days at Xavier’s!

Papa had a great academic record — he went to MIT for engineering and Harvard for MBA. It was only natural that he wanted me to go to America too. I took the GMAT, fared poorly and ended up getting into an evening college in New York, St. John’s. He asked me to go anyway and try and get into a better college from there. Chintan Parekh (who has been with me since kindergarten) and I joined the executive programme at St John’s. Everyone there was 35-40 years old! We were 23. So we simply couldn’t adjust. Somehow, we managed to get into Rochester. Papa flew down and took me there himself. I remember it was January and we walked in deep snow. I don’t know why or when I started resenting the place, but I just knew I wanted to come back. It was probably the wrong decision, but it felt right then. I can’t forget the letter papa wrote. “I feel guilty that I pushed you into this, so please come back without any hesitation if your heart is not there.” Those were the words I wanted to hear. I packed up and came back home. 

Once I was back, I worked for a year at Arvind, managed to get some experience but no important assignments. I had my eyes set on getting an MBA so I applied to all the top business schools in the country, including IIM-A. I managed to get into Jamnalal Bajaj Institute of Management Studies, Mumbai. Ironically, IIM-A was co-founded by my grandfather, Kasturbhai Lalbhai, along with Vikram Sarabhai, but he never made that phone call. He wanted to build an institution of excellence; that would only be possible through 100% merit. IIM-A was, of course, the brainchild of Vikram Sarabhai. He got the affiliation from Harvard. Dadaji was offered the chairmanship, but he refused, saying that will give it a “local Gujarati flavour.” He wanted a global positioning so he backed off. That was dadaji.

At Jamnalal Bajaj, it was hell since the course was tedious, to say the least. KS Basu, the director, would say: “Learning theory is easy. I want to put you up against impossible odds to see if you can survive.” True to his word, he did exactly that. Being a science student, I had to learn accounting and become adept at doing a trial balance in just three months. If I failed, I was out of Bajaj. The time to learn was always short, be it a project, case study, discussions or exams. It was especially tough for a guy who had never worked so hard! 

I liked the course though, which spurred me on. But life had a different hand for me to play. I developed an abscess and had to be operated on, immediately. The exam was just ten days away! My parents met Basu, asking if he could waive off my final exam or hold it later. He said, “Shrenikbhai, in life would you get a second chance like this? If you cannot appear for the exam, you have to repeat the year.” My parents were packed away in characteristic Basu style…I attended the final exam on a stretcher. 

It was an important lesson: There are no exemptions in life! You face problems head on and come out a winner or a loser. My first brush with a tough situation had a happy ending though — I passed with decent scores. I believe there’s a thin line separating the successful and not so successful people — it’s their sheer perseverance. It’s not that they are smarter or have better aligned planets. When you toss a coin, the probability of winning is 50:50. It’s the same with life. Yes, it does throw curve balls at times, but in the long-term everything evens out. Even things that look cripplingly bad, eventually turn around, simply because you outlasted the bad phase. 

If I’m not mistaken, we were a batch of 48 guys. The second year, I specialised in finance, and we were reduced to 17. Most of the guys had opted for marketing. Subbu was from a film-making family. He would always say he would make films after Bajaj. 

Years later, meeting a batchmate, the conversation turned to Subbu.

“Arre, Subbu has made it great in films,” he said.

 “Apna Subbu?” “How?” “Where?”

“Arre, Mani Ratnam is apna Subbu,” he laughed. 

It felt great to hear the news. Bobby Bedi also did well. He directed Bandit Queen. And I can’t forget the professors – the two Gurumurthys (bada and chota) — they were some of the finest brains in finance. Absolutely brilliant! 

***
By the time I graduated from Bajaj, dadaji had worked out a phenomenal succession plan. He was a true visionary — joint ventures, professional management, and even women empowerment — way ahead of his time. He started seven composite textile companies for his four sisters and three brothers. They were all listed and each member of the family was given a company. So my unmarried aunt, Lilavati Lalbhai, got a mill, as did the other sisters — namely Jhaveri, Nanavati and Hutheesing. That vision to segregate the companies, kept the family together. Even today, we are a tight-knit family. 

Atul was another one of dadaji’s masterstroke. He bought around 1,500 acres in Valsad — a unique location with river on one side, a railway track on another, mountain on the third and highway on the fourth. It was a perfect location for a campus. He stitched together three collaborations — one with an American company called Cyanamid, second with Swiss-based Ciba-Geigy and the third one with ICI from UK. Atul, of course was the fourth one, which was fully owned by us. Way back in 1952, you could see four distinct cultures, architectures, ownership and management structures existing on one campus, which was inaugurated by none other than Prime Minister Nehru. Dadaji then brought in BK Mazumdar from the London School of Economics to manage Atul alongside the family. At that time, Chandraprasad Desai was managing Arvind. The latter was founded in 1931. 

***
I joined Arvind as a trainee in 1977. At the time, I was only responsible for materials management. My uncle Arvind Narottam Lalbhai was the chairman of Arvind and Manubhai Shah was the professional CEO. Along with my other cousins, they took care of all major functions, so I had all the time in the world. And I became a serial entrepreneur of sorts! I started new businesses with friends, dabbled in areas that were completely different from each other. With Chintan, (who was graduating from IIM-A) I already had a trading company called Amtrex. This was when we were both management students. We stumbled on to air-conditioners, built a business and then tied up with Hitachi. From there we moved to advertising with Ravi Gupta to form Trikaya. Along with Gautam Shroff, I set up a placement service called Perfect Placement, and it was one of the best then. How could I leave financial services alone! Out came Anagram Finance and then I jumped on to fasteners. At St. John’s, I was staying with Pankaj Dave. When he returned to India, he came up with the idea of buying a second-hand machine to make gum tapes. We started immediately. I also started a whole lot of companies manufacturing chemical dyes, intermediates with a friend’s friend from MIT, who was a chemical engineer. God, I think I had about 30-40 ventures!

There was very little thought or strategy. If someone came and discussed an idea and I felt there was an opportunity, I would jump in. The six years from 1979 to 1985 were extremely hectic. I kept trying business after business. The funny thing was I had zero capital, also zero approval from the family. Papa thought I had gone berserk but he didn’t stop me. I borrowed the requisite capital, 100% of it, in my personal capacity by giving guarantees. It was a 100% debt scenario but I knew what I was doing – or so I thought. I had written a paper in Bajaj that in an inflationary economy, debt is the cheapest. Professor Murthy had taught us this. What he had not taught us was that overleveraging companies could lead to death! That was a crucial lesson I missed out on. I would learn it later in life, after paying a dear price. 

In theory, the argument had merit. If you consider inflation at 12% and cost of debt lower, you are almost getting free money — actually you earn some in real terms. But then, in reality, we were borrowing at 18% at that time, so it was costly debt. I had such dire conversations with papa. He kept telling me that things would go wrong and I’ll go belly up one day. And if that happened, he wouldn’t bail me out. I still went ahead. Some of the gambles worked — Amtrex, Anagram and Trikaya did well and some others closed down. But it was a disastrous thought process. My simple advice is: never do something like this! 

This is part one of a two-part series. You can read part two here.