Jewels of India: Sanjay Lalbhai

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1 Jewels of India: Sanjay Lalbhai Sanjay Lalbhai: The Denim Man If he so desired. Sanjay Lalbhai could have joined the family business that was quite massive in scale and size and merged his identity with that of the group. But he chose to tread his own path to carve his own identity. - By: Ketan Trivedi What would one do when he is born with a silver spoon in his mouth, has successful family business running for generations and is served milk when he asks for water? At best he would take reigns of the family business when he grows up.

2 But what if after handling his business, he faces crises that threaten to pull back the company in the red, what if the company is staring closure unless some urgent measures are taken. Then? At stake is not only the company s future, but the prestige of his family. Won t he give in and surrender? No, he won t if he is Sanjaybhai Lalbhai. Sanjaybhai refused to accept defeat and relentlessly fought back to win back the honour. Here, we are talking about a success story with a difference. We all have heard the story of the proverbial phoenix bird rising from the ashes. Sanjaybhai is a living example of such tenacity. If you want to know about how he rose from the ashes of testing circumstances and soared high like the bird, let us meet him at Arvind Mill on Naroda Road. As you pass by the long chimneys of mills, mutely bearing out why Ahmedabad was called the Manchester of India, you enter the main building where Arvindbhai s office is housed and immediately feel the aesthetic ambience so tastefully recreated. The large paintings of Sheth Kasturbhai Lalbhai and other founders of the company hung on the walls in the reception area bear mute testimony to the glorious past of the company. It was Sheth Lalbhai Dalpatbhai who laid foundations of what now has a glorious past. He set up a cotton-yarn making factory in Saraspur way back in His son Kastubhai founded Ashok Mill in The 30s witnessed a recession in textile industry in the world especially England and India. Mahatma Gandhi had called for boycott of foreign clothes. Around this time, Kasturbhai along with his brothers Narottambhai and Chimanbhai decided to set up a fabric manufacturing factory. This is how the state-of-the-art Arvind Mill was founded in 1839 with an initial investment of Rs 25 lac. Arvind is one of the sons of Lalbhai family. Later, for his sisters Kasturbhai set up three mills Aruna Mill, Nutan Mill and Ahmedabad New Cotton Mill. It was followed by Atul Starch Limited in1939. As the textile business flourished, they started making forays in other fields as well and as a result the business started growing. Sanjaybhai was born to this family as the fourth generation heir in He was brought up in the joint family. His mother Pannabahen was

3 running Rachna High School in Ahmedabad. He studied in the same school (today his wife Jayashreebahen is looking after the school). He did B Sc in St Xavier s College in Ahmedabad and later obtained his Management degree from Mumbai-based Jamunalal Bajaj Institute. It was understood that he would join his family business after studies. After all, he had imbibed the business acumen from the family. He took his first step by joining the family-owned Anil Forging in 1977 where he worked for one year and a half and later joined Arvind Mill as Purchase Manager. He says, I was clear that I was not going to do job elsewhere. May be I was brought up like that..i was independent enough to decide what I was to do They were seven brothers and sisters, 14 in all, including Sanjaybhai, all of whom were in the family business. Each was looking after separate mill or division. It was a joint family and therefore they had all shared their responsibilities among them. Sanjaybhai was the Purchase Manager but the latent entrepreneur instinct in him was not letting him settle down. So while doing his regular duty, he started experimenting with forming new companies on his own. Either he would start a new company or join hands with someone to form a new unit. Thus he started an air-cooler unit in collaboration with friend Naishadh Parekh. Today, he is the owner of Ashima. He also started Anegram with Chintan Parksh. Similarly, Trikya Advertising was set up. All these were small companies, where he subsequently sold off his stakes and re-focused on Arvind Mill. Other than textiles, this Group has stakes in retail shops, real estate, engineering, water management and telecom. Arvind has as many as 60 retail outlets and the management has set a goal to raise it to 500 in the near future. Sanjaybhai has also joined hands with the Tata Group in construction project on an area measuring 2 crore sq feet in Ahmedabad and Bangalure. In Pune, the Group has telecom and Paging service. But garment is the core area of Arvind Group, it is the Group s signature business. Sanjaybhai makes 6-8 million jeans and four million every year.

4 The Group exports to nearly countries. Much of the credit for upgrading the status of Arvind from that of an ordinary mill to a top corporate house in the garment industry goes to Sanjaybhai. Sanjaybhai has however a different take on success. He says, you savour success but should not take it seriously. People are believed to be competent only after they achieve success, but actually it is not so. Even the intelligent people do fail. Yes the attribute of successful is that they learn from their failures and work harder Sanjaybhai too has learnt from his experiences. It was a tough phase for textile industry in the years following Because of power looms, fabric began to be mass-produced and got cheap. Many mills lost market and as a result, many of them downed their shutters. Since 1931, its founding year to 1979, there was not a single year when the company had not paid dividend. Now when their survival itself was at stake, there was no question of paying dividend. But under such tough circumstances, Sanjaybhai implemented what is called Renovision and rescued the company. Renovision means looking at the same situation from different perspectives. Sanjaybhai observed that other mill owners are busy planning how to close power looms. He looked at the whole thing differently. He thought why not start business differently. This is how the idea of Denim was born. The city that was known as the Manchester of India in the past began to be called the Capital of Denim. In fact, Denim paved the way for the future. It all went fine till Encouraged by the Denim success, Sanjaybhai set up a new plant near Santej with an estimated investment of 1000 crores. But this is where he made mistake. In 1997, Arvind Group ran into several crises. Large part of production was earmarked for export but the management went wrong in their forex forecast. Debts started mounting. Banks and creditors came knocking on their doors. The debts ran into something around Rs 2800 crores, out of which 70 crores belonged to the promoters, that is, Sanjaybhai s family. How to clear the debts? If no way is found, the spectre of mill closure was looming large on the horizon. He says, we knew that the project was viable, it was merely a question of changing our business strategy. We were wrong in some of our calculations. The need of the hour was to change them and move on without loss of time.

5 And that is what he did. The next four years he devoted to restructuring. He entered into a settlement with banks and financial institutions. They were given equity options. The whole process was implemented with maximum transparency. Gradually they began to move out of the woods. Recalling those days, Sanjaybhai says, we learnt a lot from this experience: never to make a big leap, move ahead slowly and keep thinking differently. Sanjaybhai brought the company back from the brink twice and gave it a new direction. But while talking to him you never feel any trace of arrogance in his demeanor. He candidly concedes that you may be successful today but may go wrong tomorrow. Worrying about what others would say or behaving as per their expectations is what Sanjaybhai abhors doing. He has a clear business philosophy. Focus on what you want to do, if your aim in business is only to earn profit, then it is a limited aim. What you can give back, your level of commitment are things you need to be clear about. What is interesting is that he does not believe that being a big business house, he needs to be busy all the time, though he insists on doing everything within deadline. Every three months, he would go out on a brief vacation with his family. He says, while on vacation, you are away from your business so can look at your problems more dispassionately. It is quite likely that this way you get the solution you are looking for, he then adds, in fact, there is nothing called being free, at any given point of time one is doing something or the other. This is how your schedule is made. It is just a question of deciding what priority you should give to which work. Now of course, Sanjaybhai s sons Punit and Kulin too have joined him in their business. Having done MBA from America s Yale University, Punitbhai is looking after the company s water management and organic cotton farming business, while Kulinbhai is in charge of Arvind Retail and Telecom. Sanjaybhai believes that successful man must know when to leave everything.

6 Well, then what is his advice to young entrepreneurs? Just follow your passion, don t do anything with huge expectations. If you make effort, you will be successful and with success money will come. Don t do anything with the objective of earning only money. Besides his father s legacy, Sanjaybhai has also preserved the family s tradition of giving back to the society. Apart from Ahmedabad Education Society, Ahmedabad University, Atira, Sanjaybhai is active in social projects like adoption of municipal school, upgradation of slums etc. Life must be savoured in every way He has succeeded in doing it and therefore perhaps he has been able to digest his success. Sanjaybhai Unplugged Sanjaybhai is fond of food, but he also knows cooking. There is a cook in the family, but in fact, all members of the family know cooking. Fond of traveling, Sanjaybhai has no favourite tourist destination. He loves Maldives natural beauty, New York s energy and Japan s cherry blossom. He also loves the wildlife of Africa. Sanjaybhai looks upon Sheth Kasturbhai Lalbhai and Vikram Sarabhai as his role models, and believes in the philosophy of disinterested and selfless work His spiritual guru is Parthsarthy Rajgopalachari, who has guided him to do meditation.