From The Brink Of Bankruptcy

By :- Richa JainRaghav SanganeriaAbhay Kr. UpadhyayAnand C

Agenda

• About the Author• History Begins – DCM• Initial Days• Up’s and Down’s of DCM• Swaraj Saga• The Fall…• Recession for the rescue

About the AuthorPROFESSIONAL STATUS

• Chairman and Managing Director, DCM Limited, New Delhi.• Executive chairman of DCM Engineering• Books written :-“Import Substitution, Exchange rates and Economic Development”, and 

"The Theory of the Global Firm”.

 

ACADEMIC BACKGROUNDAND INTRESTS

• Educated at the universities of Delhi, Michigan and Harvard, he holds a Ph.D.in Economics from University of Delhi.

• Presently Visiting Professor of Economics at the IIT- Delhi.• Has deep interest in Hindustani Classical Music and is a well known vocalist.

 

POSITIONS AND HONOURS

• Received the National citizen’s Award 1990 for Entrepreneurship from the Prime Minister of India.

• National Excellence Award for Art and culture for 1996-97 from T.P. Jhunjhunwala Foundation.

• Nominated as Life Trustee of the Institute of Economic Growth, Delhi by the Prime Minister Dr. Manmohan Singh.

History Begins• Established on 26th March 1889 – by Rai Bahadur ram Kishan Das Gurwale

as Delhi Cloth & General mill.

• In 1909 – Lala Sriram takes over – renames it as DCM.

• The group became premier quality producer in textiles, automobiles, domestic appliances, fertilizers, sugar and chemicals.

• In 1990, the DCM Group was mainly divided into four parts:-– DCM Limited– DCM Shriram Industries Limited – DCM Shriram Consolidated Limited(DSCL) – Shriram Industrial Enterprises Limited

• DCM Limited has major business units DCM Textiles, DCM Engineering and DCM DataSystems.

History BeginsDCM Shriram Consolidated Limited (DSCL)took over 1/6 of business by merging the following units of DCM :-

• Shriram Fertilizer & Chemicals, Kota ( Rajasthan) - Fertilizers, Plastics, Chlor Alkali and Power

• Shriram Cement Works, Kota ( Rajasthan) - Cement • Swatantra Bharat Mills and DCM Silk Mills (Delhi) – Textiles

In the decade, 1990-2000, DSCL added the following units to its portfolio :-

• Shriram Alkali & Chemicals, Bharuch (Gujarat) - Chlor Alkali • Shriram Environment & Allied Services, Gurgaon (Haryana) - Environment &

Allied Services • Ghaghagra Sugar, Lakhimpur Kheri ( Uttar Pradesh) - Sugar • Shriram Bioseed Genetics India Limited, Hyderabad (Andhra Pradesh) -

Seeds • DSCL Energy Services Company Limited, New Delhi - An Energy Services

Company

Initial Days

• Established on 26th March 1889 – by Rai Bahadur ram Kishan Das Gurwale as Delhi Cloth & General mill.

• In 1909 – Lala Sriram takes over – renames it as DCM.

• Between 1910 – 1980 Many ventures were launched like – Casting factory, sugar mill, Bengal pottery, Jay engineering works, Data products, Hisar textile mill etc

• DCM used to hire people from LSB and MIT.

• By 1970 DCM was among the top 5 private companies in India and diversified its business into varied fields.

• People like Zakir Hussain, Shiv Nadar were DCM employees.

Up’s and Down’s of DCM• During 1914 DCM supplied tents and blankets to army.

• Sriram came with the idea of colonies alongside factories (with subsidiary grocery shops, primary schools, living quarters).

• Modernization and expansion of textile mills around 1930

• DCM’s (Sriram) support to Swadeshi Movement and invited MK Gandhi in Indian chambers of commerce and industries.

• Opened sugar mills in Daurala UP in 1934.

• Textile mill in Layllapur in 1934 with colonies.

• Acquired Bengal potteries and started Jay engineering works in 1934.

• Was very much influenced by Henry Ford.

Up’s and Down’s of DCM• Sriram was in board of RBI and British Monarch George VI awards a

knighthood to Lala Sriram.

• He had interest in music and leant it from Pt Ravi Shankar.

• Shri ram led the foundation stones of IIM-A in 1951 and was a visiting lecturer till 1968.

• Approached Sony and Toshiba for desktop calculators.(father president ICC)

• Converted deal with Toshiba with orders placed for 2000 such models.

• DCM Data Products was started along side swatantra textile mill whose marketing head was Shiv Nadar and they hired management graduate Arun Joshi from MIT.

Up’s and Down’s of DCM• 1st microcomputer was lauched n 1974 by data products

• In 1976 under TG kriplani pulled in many employees from IBM as it was winding india.• In 1977 1st mini intel chip based mini computer was launched by Data Products.• Around 1973 started Hindan textile mills.• In 1976 iron foundary was formed.• In 1972 dharamveera (brother in law of charat raam) joined DCM as advisor and thus

started the disputes among the brothers bharat ram and charat ram.e.g. presenting of financial data to executive committee.(gaps between winners charat ram and loosers Bharat ram, due to rev issues dharam asked bharat ram to retire, vinay bharat ram was summoned and strtd talkin abt the mismngmnt in Textile Induatry and was asked to step down)

• In 1984 Hisar mill was closed with the help from centre after union troubles• 1983 met an agreement with toyota to build light commercial vehicles

Swaraj Saga

• After closing of Hisar mills, the company already in

dire financial straits, was targeted by UK-based

businessman Swaraj Paul for a takeover. A bitter

struggle follows.

• Swaraj capitalized over RBI decision of involvement

of NRI’s in Indian market and occupied 13% of

company shares while DCM’s promoters had only 9%.

• He was demanding a say over company management.

• The issue was resolved on involvement of Rajiv

Gandhi, the then prime minister of India, on personal

grounds.

The Fall.....• The division in 1989:

The Fall….(contd.)

• Singapore Consortium declination

• Toyota’s Declination

• Daewoo collaboration blunder

• The partially convertible debentures that the company was forced to issue in the early 1990s, raised the debt on the company’s books from Rs 50 crores in 1991-92 to Rs 400 crores in 1997-98 adding icing to the cake.

• DCM was perilously close to the situation of being Declared Potentially Sick.

Recession to the Rescue

• During recession the real estate prices fell and industrial capacity stood underutilized.

• SORA (an initiative launched in the BHC by creditors) got delayed due to court procedures in which DCM was benefitted by non payment of interests during the period.

• Decline in real estate dampened the argument for claim to interest on real estate.

• UTI agreed to settle on the principal amounts.

• As operations in textile and engineering would suffer from shrinking book, DCM improvised on cash conservation and quality of goods towards the domestic market.

• HDFC supported Purearth to launch it’s commercial project.

Too many Rams cook the DCM goose

They tried to use problems to hold warring factions together saying the family must stay together in times of trouble. They failed..