‘I’m fairly hands-off in my approach’

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: be optimised since excess would lead to imbalance between what the government’s perception was of demand and supply.” This is why the government exerted control while doling out licenses.

But what made Modi learn most of his lessons was the steel business he started in the 1980’s. Using non-coking coal to make scrap iron, the group founded the Bihar Sponge Iron Company in the 1980’s. Modi says his, conversation with the then ICICI chairman Nadkarni who later went on to join IDBI, encouraged him to get funding from foreign banks for the project. However the 1991 opening of the economy and the devaluation of the rupee impacted the company’s foreign debt. Modi recalls the rupee de-valuing from from Rs 7 to Rs 24 against the deutsche mark in 1991.

Additionally, because of the devaluation, steel prices went up by 40% and the government had to bring down import duty from 35% to 5% to stabilise prices. ‘Unreliability of exchange rates’ was exactly the lesson which has protected Modi today from the upheaval in the international financial markets and devaluation of the rupee. After the episode of the early 1990’s Modi stayed away from foreign funding and depended largely on internal cash flows to fund his businesses.

However, the opening up of the economy also gave Modi an opportunity to make a foray into the consumer goods industry. In 1993 Revlon came into India through a tie-up with Modi Mundipharma. Starting with Rs 8 crore revenue in 1995, today the company makes Rs 183 crore and is projected to grow to Rs 524 crore in the next five years. “We can proudly claim to have grown the Revlon market in Sri Lanka and are also looking towards expanding in Pakistan and Bangladesh.”

Not forgetting his core businesses, in 1998, Modi revitalised his sugar company to create an energy efficient sugar plant which lowered the cost of preparing sugar. His philosophy through the 90’s and even now has been to adopt a low risk approach. “I want to focus on profitability, low debt and low foreign exposure in terms of debt,” he says.