The past can never become history for the 47-year- old E Sudhir Reddy, CMD, IVRCL Infrastructures and Projects Ltd. It is his past, with loads of hands-on experience, which has elevated him to this position of managing Rs 4,600-crore IVRCL group. This is despite the fact that he never excelled in professional studies, never believed in reading management books and never had any dream gurus.
Pressure from his family members and constant taunts from his renowned lawyer father Ella Reddy gave Sudhir enough determination to make a career for himself, thus becoming a first generation entrepreneur. After completing graduation in arts from the prestigious Nizam?s College in Hyderabad, he took financial support from his father for setting up his business.
??Since I hailed from a privileged class, I led a reasonably luxurious life. I drove a Maruti 800 during my college days. But I knew how to eat with and without a fork,? Sudhir recalls. This attitude has helped him to balance his personal life and business work.
?Cricket is my passion and I wanted to pursue the game. But my father thought otherwise. He wanted me to become big in life by taking up engineering or pursuing a career in law.? However, it never clicked for him.
?My father, after pledging his house, gave me Rs 20 lakh over a period of time to do business, which was very much alien to me. He was my angel investor,? he recollects. ?I was joined by my friends as business as partners. We were too naive to know about the infrastructure industry. The fact that we were young gave us the strength to take on all kinds of risks and accept failures as stepping stones to success. We are contractors and we work at the ground level. Our practical knowledge is better than the theories in books,? he says.
IVRCL Infrastructures today is among the youngest and fastest growing construction companies in India with its presence in all the strategic core sectors like water, irrigation, transportation, buildings and power transmission. The company is into all types of contracts, be it a cash contract or a turnkey, engineering project construction or concession projects.
The company was set up in 1987. ?The first venture was a Rs 42-lakh railway project and we lost all our money. The second project worth Rs 5 crore was a subcontracting work in Bihar, which was again a disaster. But that did not deter us even a bit. We kept working hard to get a break in the business,?? he says.
And the first real break came in 1990 from a project in Andhra Pradesh. That was the first time the company booked profits of Rs 1.10 crore in its balance sheet. During the first three years of business, the partners went their own ways. And then Sudhir decided to build a team with just professionals.??After that, the team never looked back. We kept bidding for more projects and ensured that the money earned was ploughed back into the business. The profit-after-tax of the company was Rs 210.47 crore ending March 2008,? he says.
After gaining a firm ground in the infrastructure space, the company diversified into real estate by floating a subsidiary IVR Prime during 2000-01. The real estate arm today has a land bank of 3,300 acres worth Rs 2,500 crore. ?Our timing was just right and stars were shining bright for us. So, we managed to grow fast on all fronts from a mere Rs 35-crore topline in 1995. That was the time the company went in for its first IPO of about Rs 9 crore. It was a success, thanks to the market conditions,? he says.
The feel good factor continued for the company. It saw investments coming from Citigroup and ChrysCapital to the tune of Rs 78 crore in 2003. Again, in 2005, it went to the market with a follow-on IPO. The IPO received good response and the company managed to raise Rs 126 crore. This was followed by foreign convertible currency bonds issue of Rs 300 crore in 2004. And in December 2005, the company again raised Rs 555 crore through a QIP (Qualified Institutional Placement).
After several deliberations, the professional team decided to focus on water and irrigation projects as the market was opening up. ?Then water became our calling and served our business interest. Today, the company has an order book of over Rs 15,000 crore mostly packed with government projects. Of this, 65% is from water and irrigation projects, 17% from buildings, 10% from power and the balance is from roads and other miscellaneous segments,? he explains. Sudhir also claims to be bidding everyday. Today, according to his order books, pre-qualified bids amount to Rs 20,000 crore. And the net worth of the company last year was about Rs 1,600 crore and by the end of the current fiscal, it is expected to touch Rs 1,900 crore.
He quickly adds, ?The entire credit goes to the 8,000-odd dedicated employees and the professionally-backed directors, who are key people managing business on a daily basis.?
The company never sat on its laurels, and continued to explore new avenues to grow. ?After setting up IVR Prime, we went on to diversify and acquired Hindustan Dorr- Oliver Ltd for Rs 54 crore in 2005. It was followed up with the acquisition of Alkor Petro Ltd for Rs 15 crore in 2007.?
If the order book of Hindustan Dorr is added, the overall order book of IVRCL group would go up by another Rs 1,000 crore to Rs 1,200 crore.
When the industry is facing a high attrition rate across the board, Sudhir boldly claims that there has been no attrition among senior members over the last 15 years. ?The secret for a company to grow is to enable all employees internalise the spirit of corporate governance rather than look at it from the point of view of investors only,? he advises.
IVRCL is currently executing large-scale irrigation projects in Andhra Pradesh, Maharastra, Madhya Pradesh and Gujarat . Other water and environment projects range from drinking water to lift irrigation, water treatment plants, sewage treatment plants to solid waste management etc. Recognising the immense potential of desalination as a major sector, IVRCL has entered into this relatively new but highly prospective sector in a big way. It was but natural for IVRCL to foray into this niche sector, given its strong credentials in other areas of water. IVRCL has grabbed the opportunity of making Chennai Desal, the first of its kind in the country, with a capacity of 100 MLD, a reality by teaming up with one of the best technology providers in the world.
So how does Sudhir see the future? The company is looking to raise long-term money and sit on cash, wait for possible smaller acquisitions in the near future and not look at equity dilution. On his personal front, he is all set and has positioned the company with a strong team of leaders. However, the going would be tough, given the volatility of the market, yet he hopes to touch Rs 20,000 crore on a growth rate of 45% of CAGR provided there are opportunities such as replacement of ageing infrastructure projects, foraying into marine mining, including micro tunneling and non-conventional energy segment.
IVRCL Infrastructures is looking to partner with players in the industry, both in the domestic and international market for the new business areas. In any case, he is not worried. He says, ?I am not working harder anymore. The succession management is very clear.?