The outsider

He was not even in the direct line of succession, let alone becoming the main inheritor of the Thapar legacy. Gautam Thapar, chairman & CEO of the $4-bn Avantha Group, tells Sarika Malhotra & Shailesh Dobhal that outcomes in life or business, much like golf, all boil down to ?how you play that shot?

He looks not a day older than 40, thanks to a strict exercise regime and love for sports ?squash, tennis earlier, and now golf. But hear him hold forth on anything from energy security, efficient state capitalism of the Chinese or the global versus international nature of businesses, and you realise he’s matured well for his 50 years.

There is also no sign of the ‘hurt’ that he was allegedly, and famously holding as the 20-something for being likened to the ‘dead branch’ of the family tree since his father (Brij Mohan Thapar) opted out of the family business. ?Well, it?s been so long in the past and I seem to have forgotten about it all,? quips Thapar when we ask him on his much reported blow hot and blow cold relationship with the undivided Thapar Group’s bachelor-patriarch, LM Thapar (LMT). ?I went to the US in early Eighties not in anger, but to get an education. But I didn’t come back as I felt there was nothing in India for me to come back to, and this was the difference of opinion between me and my uncle (LMT) who maintained that there was this huge family business. For four-five years I stuck to my guns and he stuck to his and we didn’t even talk,? he reminisces.

A thaw in 1987, two brilliant turnarounds?at AP Rayon and BILT Chemicals?and a rescue act at paper maker Ballarpur Industries (BILT) which was all but run to the ground by another family member, and the young Thapar had caught LMT’s eye and become a favourite. ?I had a vision for it (BILT), and was all of 39. Though he (LMT) did have reservations about my style of working, he did not stand in the way.? After a family settlement in 1999, wherein Gautam Thapar got BILT, Crompton Greaves, Global Green and Solaris ChemTech, there was no looking back. Thapar has been busy remaking his companies in the past 12 years, even snapping the umbilical cord with the old group by renaming his group Avantha?’Avan’ comes from the French ‘avant,’ meaning forward, vanguard, advancing; and the Sanskrit ‘stha’ stands for stability.

?The identity of Avantha has to stand the test of time, so we should take our time to build it. I am clear that BILT and CG will not change, but new businesses we’re starting will bear the new name, Avantha.? But just what identity does he want Avantha to stand for? According to Thapar though its early days, given Avantha was christened only in 2007, the challenge here is bigger since half the workforce already sits out of India, and the journey has to take them along too. ?As many as 50% of my employees are not Indian. Our employees today think that we don’t belong to an Indian group, (but) to a professional group. An organisation that transcends all these boundaries and is very concerned about its people and does not put a denomination on them.? Obviously, issues around Avantha and managing its 15 country operations are consuming a lot of

Thapar’s bandwidth.

No wonder he passionately explains the nuances of a global vis-a-vis international company. ?Ultimately, when you go into a market outside India, the differentiator is your brand equity and technology. A global company doesn’t just compete, but defines the terms of engagement in those markets.? Merely being present in a number of countries makes you international, not necessarily global. So how far down the line are Indian companies on being global? ?We have lot of learning to do. A good global company understands how to deploy resources, especially RD and technology, in thinking global but acting local. For a lot

of Indian companies this will always be a

challenge, or till your home market gets to a scale or size where you start titling the

tide, just what happened to China.? While at it, why have his group companies avoided China so far? ?Well, they have two set of rules. How

do you compete with efficient state-led capitalism? You will wake up in ten years time and suddenly start finding that Chinese

companies are bidding for the best. I think

you will see non-tariff, non-trade related

issues beginning to rise strongly as these

Chinese companies try to grow. It will be a (global) challenge.?

Is Indian manufacturing rising to this challenge? ?Manufacturing hubs don’t make for technology. You can’t ring-fence the entire country. We have to have an industrial policy that makes manufacturing attractive for re-export, and for that you have to allow initial import. But ultimately this has to be linked to local production. Moreover, for Indian companies the challenges here are changing again. The Americans and Japanese firms are far more cash rich, and with no returns and growth in their home markets, are prowling the world trying to snap up industrial and

operating assets.?

Isn’t Avantha too diversified?paper, industrial machinery, vegetable exporter and now even power plants? ?A company should have a core competence. A group, how does it matter? At the end of the day, I have my task cut out, I deploy capital, and we need to be in industries that have scale and size.? So would he enter banking, a business that has both scale and size? ?Why not? The sector is big enough, and the country is under-banked. I am reading all the media stuff on it. Right now, the rules are not set, and we’re not in the habit of announcing things are not following them?? But with plans for 5,000-6,000 mw in power, that won’t even make Avantha anywhere close to being a big boy in this business? ?Well, profitability is far bigger focus for us. At 6,000 mw, I (will) not be the big daddy and neither a small baby. Its’ utility, not rocket science. And most of the risk is in project execution, and managing your power purchase agreements. Once that’s done, it?s a solid, consistent cash flow business.?

What does he think about nuclear power, given the brouhaha around Jaitapur in wake of the Japanese Fukushima accident? ?Personally, I don’t think we have a choice given our lack of (energy) resources. The debate should not be nuclear power or not. The debate should be, given the necessity of nuclear power, how do we make it safe.?

As we wind down the interview with Thapar, one last question on succession in a family business like Avantha is in order. ?In a certain sense, though I am a third-generation family business, I am a first generation owner of businesses that 100% belong to me. Though I chair BILT, CG and the holding company, I am consciously not chairing some others, and I am already not the operational chief of many of my companies. I have a game plan till 65 years, and a game plan after 65.?

Gautam Thapar

Chairman & CEO, Avantha Group

birthday: December 7, 1960

FAMILY: Married to Stephanie. Has two children

EDUCATION: Studied chemical engineering at Pratt Institute, US

POSITIONS HELD:

– Board Member, National Security Advisory Board

– Chairman, The Aspen Institute India

– President, All India Management Association (AIMA)

– President, Professional Golf Tour of India (PGTI)

– Director, Avantha Foundation

– Trustee, Council on Energy, Environment and Water