In July 2008, while heading the Aditya Birla Group?s pulp business spread across Canada, Laos and several other locations, Thomas Varghese got a call from group chairman Kumar Mangalam Birla, asking him to take over the reins of the retail business. The company had ?unimaginable? losses then; it was losing money and had to downsize by almost 60%. Sitting in a small meeting room of an under-construction ?More? hypermarket, Thomas Varghese says even after three and a half years of taking charge, he is ?still finding it difficult? to crack the code in the tough Indian retail space.
In 2007, the company had acquired Tirnethra, later rebranded to ?More?. In the beginning of the fiscal year 2008, it was a R200-crore company, with 180 stores. In five years, it has become a R2,200-crore company, with 589 supermarkets and 13 hypermarkets, with two more coming up this year. But the profit is still missing.
?The reality is that no Indian retailer has been able to surmount the challenge of creating a successful chain in 25 years. If we are able to do it, and we see no reason as to why we can?t, we will be one of the first retail chains in the country that meets international standards, and also makes money,? says Varghese.
But this is not the first time that Varghese has been thrown a challenge to resurrect an ailing business in the Aditya Birla Group. ?I think the reason why Mr Birla had faith in me with the retail business is because of three key transformations I had already managed in my 11 years with the group.?
The first, he says, was when Birla head hunted him in 1999 from Indo Rama, a synthetic fiber manufacturer that Varghese was heading at the time. Indo Rama, says Varghese, was one of the only companies at that time that had managed to withstand the onslaught that Reliance had launched on textile firms.
?I had a good experience of taking Reliance head on. They just slaughtered the competition; Bombay Dyeing and so on. Nobody had given us a chance. But Indo Rama was the only company that stood up to it. And I was responsible for ramping up polyester capacities for it,? Varghese recalls.
But polyester?s growth had hit the Aditya Birla Group where it hurt most. Its pulp and fibre business, which produced viscose, and had been one of its mainstay businesses for over 50 years, was running the risk of going under.
?The pulp and fibre business had just tanked completely after polyester came in at one-third the price. They had huge capacities, and utilisation had gone from 200% to 50% between 1994 and 1999. They had invested almost R600 crore for a plant in Gujarat, which was not being used. My job as a chief marketing officer was to build a marketing infrastructure that had never existed there before, and bring about a transformation with the help of the business head.?
Within 18 months, the business was running at 100% capacity utilisation. They acquired a plant in China for close to $50 million around that time. And today, it is the world?s largest viscose manufacturer.
His second transformation was when he was moved as head of the pulp business, managing and acquiring units in Canada, and even setting up greenfield operations in Laos.
But the one move that turned his career, and his personal life on its heels, was when Varghese was unexpectedly put in charge as chief manufacturing officer in one of the group?s most complicated plants in Harihar, Karnataka.
The plant, as Varghese describes it, had a ?militant? workforce with even instances of murders. Unions ruled the roost; perennial environmental issues made it a political issue, being discussed in the state assembly virtually every day. And to run this almost unmanageable plant, Birla chose the one person with absolutely no experience of running one.
?I went there with a lot of trepidation. I had never run a plant. I had no experience of running a manufacturing complex, let alone one with 4,800 people, plus the schools, colleges, hospitals and the community around it,? says Varghese with a hint of disbelief in his voice.
?The next three and a half years was a transformation of my own life. I moved in there without my family. I was also not sure if that was the right move for me. My own team looked at me as if I was a wrong decision; like someone had lost it for sending me there. But the only thing I was sure of was that my chairman, and my business head, Shailendra Jain, gave me 100% support,? he says.
Varghese took on the labour unions, which, in return, threatened to take his life. ?We had Section 144 imposed regularly for 14 months, which was unheard of, and I had to ensure that my movements were always known only by me and my driver,? he recalls. He downsized by almost half, and settling all environment issues before leaving in 2007.
For his efforts, he was awarded outstanding business leader of the group, and sent to Harvard Business School for a management course. Not bad, for a man who claims to have been completely clueless about what he wanted to do in life, besides playing cricket six hours a day, till he was a teenager.
?I was a very average student till almost Class VIII, and then suddenly my grades started improving as I went to higher classes. But cricket consumed all my time; I even played for Cooch Behar, and I never gave a serious thought to what I wanted to do,? Varghese says.
But he did have a friend, ?a smart, good boy?, who his mother constantly compared him to. ?She always used him as an example, because he came first, and he was planning to appear for the IIT entrance test. And I did not even know what IIT was.?
When he discovered that he could solve mathematical problems that his smart friend could not, Varghese wrote the entrance test and got admission in IIT, Delhi. ?My friend didn?t,? he adds.
If he hadn?t known he had a competitive streak before, he knew it now. ?I am very, very competitive. I was a ten-pointer and a gold medalist in IIT. I have been working 14-16 hours a day for the past 25 years. I sometimes expect the same from my team, but I know that the expectation is too much.?
But his work personality, he feels, has been shaped more by having the toughest of bosses throughout his career than anything else. ?In Shriram Fibers, my boss was tough, and the 14-15 hour work day started from there. At Indian Organic Chemicals, where I worked next, my boss was again very tough. So I have learnt to manage tough bosses and their tough expectations,? Varghese says.
However, his views on his current boss differ. ?Mr Birla is a perfect gentleman, and I have never seen him raise his voice in all these years. He has exceptional leadership skills you will rarely see. My business head was an MIT graduate, and was absolutely brilliant. And with bosses like these, you develop a work ethic that sets you apart,? he adds.
His own style of leadership, he feels is very ?clued on?. ?And although I wouldn?t say I micro manage, I like knowing what is happening.?
But does this work ethic allow him to have any passions beyond work? ?Not often, but I do like trekking. I loved photography too, and even put together a book of all my photos. But my old Nikon is now lying idle at home,? says Varghese. The same can’t be said about him!
