Forbes India 15th Anniversary Special

For Adventz Chairman Saroj Poddar, Gillette Was Just The Beginning

Indian men will always thank Saroj Poddar for bringing Gillette to India. But for the chairman of Adventz—it has Zuari Agro and Texmaco in its fold—it was just one instance of showing his skill in forging international alliances

Salil Panchal
Published: Mar 12, 2014 06:41:38 AM IST
Updated: Mar 7, 2014 06:30:17 PM IST
For Adventz Chairman Saroj Poddar, Gillette Was Just The Beginning
Image: Aranya Sen for Forbes India
Saroj Kumar Poddar with son Akshay

It would appear that 68-year-old industrialist Saroj Kumar Poddar, born into a Kolkata-based trading family, had begun to think business from a very young age.

Picture a young Poddar, growing up in the 1960s, who had just started to shave. For his friends, this would have been an exciting initiation into a routine morning act that paves a smooth road to adolescence. Instead Poddar, even as a teenager, saw a huge business opportunity.

In India then, with an economy that was still largely insulated and imports that were limited, there was a lack of premium quality shaving blades. “Looking at the size of the country, I felt Gillette was a product with huge potential,” says Poddar. And in just a few years, he made the move which was to bring him significant success as well as recognition for being instrumental in bringing the US-based personal care giant to India.

It was a masterstroke. There were no premium shaving systems, no triple blades or gels in India at that time. The few shaving blades available were produced by Harbans Lal Malhotra, who sold Bharat and Panama blades apart from the better-known Topaz brand.

For Adventz Chairman Saroj Poddar, Gillette Was Just The Beginning
Poddar first approached Gillette in 1970—with almost no expertise in that field—seeking a joint venture with the Massachusetts-based firm. A JV was the only route for a foreign firm to operate in India at the time.

But Gillette refused his offer, several times.

“They would gently say that India was a difficult country to work in and that they wanted a majority ownership,” Poddar told Forbes India during a conversation in his colonial-styled office room at Hong Kong House in downtown Kolkata.

However Poddar, who had started learning the ropes of his family-run textile mill and hire-purchase finance businesses, was relentless in his pursuit, promising them flexibility of operations if they chose him as a partner.

After initial meetings in London, he was invited to meet Gillette’s top brass in Boston in 1973, who quizzed him on why he should be chosen as a partner.

“The then CEO of Gillette said we could fill up an entire room with correspondence from Indian firms who have shown interest in working with us. So why choose you?” Poddar recalled.

“But somewhere interest was generated,” Poddar says and Gillette finally agreed to an alliance with him in 1977. It took another seven years for India to clear the proposal through a Cabinet decision, marking Gillette’s entry into India through a new firm Indian Shaving Products (ISPL). Gillette acquired a minority 24.5 percent stake, Poddar getting 27 percent and the balance being held with the public: In 1984, ISPL came out with a public offering to fund its manufacturing operations.

This was the start of a long and successful story of one of Kolkata’s biggest and, yet, low-profile businessmen. He, along with son Akshay, heads the $3 billion Adventz Group, which comprises 23 companies across several verticals such as fertilisers, engineering, infrastructure, real estate and furniture retail.

Gillette brought superior shaving systems, going for stainless steel blades instead of carbon steel, then spluttered platinum on its blades and later introduced gels and aftershaves for the Indian market. The stock also has brought cheer to local investors, recording an over three-fold return of 226 percent in its stock price at the Bombay Stock Exchange, over the last five years.

Last year, Poddar had to sell off a significant portion of his stake in ISPL as per Securities and Exchange Board of India (SEBI) guidelines. However, this venture continues to define the acumen of the unassuming industrialist.

Prior to the Gillette project, Poddar had started working in the family’s Poddar Projects Spinning Mills while still in college. “It was mainly managerial tasks, along with the help of a chief executive,” Poddar says.  

Born into a well-off Marwari family, his father Badri Prasad Poddar owned the country’s biggest coal mines before nationalisation in 1971; he had also established large textile mills. “You are already at an advantage in the sense you have a base ready for you. Why should you go anywhere else? That opportunity is available with you for the asking,” he says about the Marwari heritage.

Akshay, who is being groomed to take on the big job, agrees. “When we were small, we heard the word ‘business’ so often. I saw the passion with which daddy and my dadaji [grandfather] worked,” says Akshay, 37, whose initiation into the business was early, like most Marwari children, and inevitable.

“I think the family name, reputation and value system, made me want to come back [from London where he studied],” he says.

Poddar adds: “When I had started working at Gillette and was in London, I would invite Akshay—who was studying at the London School of Economics —to join me at some of the meetings. I told him, just watch and learn.” After specialising in finance and accounting, Akshay has been working full time with his father since 2000 on several projects.

The empire grew rapidly after he inherited fertiliser conglomerate Zuari Agro and a then sick company Texmaco from his late father-in-law KK Birla in 2008. Poddar, who is married to Jyotsna, the second of Birla’s three daughters, was chosen by the late patriarch to revive the fortunes of Texmaco.

The legendary KK Birla tag was later shed in 2011 as Poddar rechristened the group Adventz, with Zuari and Texmaco, an engineering and infrastructure firm, as the flagship companies. He is also the chairman of Chambal Fertilisers, with the ownership split between the three Birla sisters.

As part of the restructuring Poddar ensured that his key businesses of fertilisers and engineering—which contribute over 85 percent of the group’s turnover—become less dependent on the government, in terms of subsidies and policies respectively.

Texmaco is the largest wagon manufacturer in India but is heavily dependent on the Indian Railways for orders, producing one out of every four wagons for them. To de-risk the business, he set up a separate export firm (Texmaco UGL Rail) in an alliance with Australia’s UGL. This firm, with a modern manufacturing workshop and robotic machines, now exports fabricated products to Kazakhstan; it also supplies to GE. Texmaco will start producing high precision railway components, locomotives, metro rail coaches and passenger vehicles from a factory that is nearing completion in Kolkata, with technical support from Japanese engineering giant Kawasaki, Poddar says.

On the fertiliser business, Zuari Industries has co-invested with Japan’s Mitsubishi in a Peruvian mine for rock phosphate, in a move to create an assured supply of di-ammonium phosphate (DAP), which is a key farm nutrient in India.

Zuari has started setting up a Rs 4,500 crore ($725 million) phosphate complex in Ras-al-Khaimah in the UAE, to convert rock phosphate into phosphoric acid and bring to India to make DAP.

Meanwhile, Poddar is also in the midst of a fiery corporate war with Deepak Fertilizers in a bid to acquire control of Mangalore Chemicals from Vijay Mallya’s UB Group. Poddar’s Zuari and Sailesh Mehta-led Deepak Fertilizers hold 16.5 percent and 24.4 percent stake respectively in Mangalore Chemicals. Poddar maintains he is keen to buy out Mangalore Chemicals, as it is a good fit with Zuari Agro, but he also points out that he is willing to divest his stake and “not block resources of the company” if there is no progress on the deal.

Mallya has not yet taken a decision on the deal and is in a bitter court battle to prevent banks from selling any properties and assets given as security against loans to revive his ailing Kingfisher Airlines.

Analysts see Poddar’s entrepreneurship skills in building alliances with multinational giants and in bringing Gillette to India as key strengths that take his position beyond that of a low-profile Marwari whose business interests were traditionally run largely out of eastern India.

“In most business families, it is rare to find more than one diamond which becomes the cash cow for the group. In Poddar’s case, Gillette was that diamond which gave him recognition, fame and success,” says Sonam Udasi, head of research with IDBI Capital.

Udasi, who has tracked Gillette’s success in India, adds: “Poddar also had the foresight to understand that this was not something he could do on his own. Most promoters feel that they can outdo overseas players and do not want to relinquish their hold on a project.”

But after a successful term, Poddar was last year told to sell off a portion of his stake—through a public offering—in Gillette India, as per regulations from SEBI which mandates that the public holding in a listed company be a minimum of 25 percent.

Gillette’s new owners Procter and Gamble, who acquired it globally in 2005, paid financial services firm Poddar Heritage an undisclosed sum for the stake they sold. Poddar resigned as a director from the board of Gillette last year, but retains a 4.99 percent stake in the firm and is still the largest non-promoter independent shareholder of the company.

Son Akshay has now taken charge of the family’s ambitious real estate business. Adventz holds over 1,000 acres across Delhi, Karnataka and Goa, which will be used to develop residential housing projects. The first two phases of the Mysore township in Karnataka, with 3 million sq ft of built up space and affordable houses, villas and apartments, are nearing completion through group firm Zuari Infraworld.

Akshay, like most young sons in a legacy empire, is treading carefully. “It is a tremendous pressure and a very big challenge to match what my father and grandfather achieved. I only think about how much more I can learn each day. My own goals can come later,” he says.

But while father Saroj focuses on strategy and building partnerships, Akshay is bringing his LSE business skills to the group. “Our businesses are old businesses. We need constant upgrades,” says Akshay, adding that business applications like SAP and the use of technology to aid dealers and distributors was critical. Adventz has pumped in money for data recovery systems in case of natural disasters or loss of data at the Zuari and Paradip factories.

Akshay is simultaneously working on improving efficiencies, modernisation of old steel casting plants and boosting raw material handling, warehousing and environment standards for Zuari’s agri-chemicals business.

It helps his plans that though the group is run by a Marwari family, it has a professional management system across all its companies. The Poddars insist there is little friction between the family and the management. “Either they convince us or we convince them. One of us has to convince the other. Whichever decision is a joint ‘our’ decision,” says Akshay. And if neither is convinced, the two parties take time to understand each other’s objectives.

What has proven significant in the professionalisation process is that Marwari families are paying more attention to the education of the younger generations, says the senior Poddar.

Not that those who have learned their craft on the ground were less successful, he adds. After all, the work ethic of the traditional entrepreneur is legendary. Consider that the billionaire himself prefers a low-key life, spending weekends playing with his grandchildren and enjoying a game of cards with old friends.

But, as has been his style, he is acutely aware of the changing business environment. As he points out: “Now there is a world of difference. In earlier times, everything was India centric. Today there is nothing like an India business—every business is a global business and you need people who understand global markets.” Something he did almost four decades ago.

(This story appears in the 21 March, 2014 issue of Forbes India. To visit our Archives, click here.)

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