Pathbreakers 2
“In 1899, a horseless carriage was your car. The Internet today is in the horseless carriage era”

Ajit Balakrishnan launched one of India’s first dotcom companies and his entrepreneurial...

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“I have seen many bubbles in my lifetime in Dubai as companies have come and gone”

Dr Ram Buxani has established a reputation as a conscientious and sensitive voice of...

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“Our share price is going up but the larger picture is also important; otherwise, you are only playing a numbers game”

Pramod Chaudhari narrates how his innovation in pollution treatment equipment led him to the challenges of climate change

Pramod Chaudhari is a man with a penchant for choosing the bigger challenge and the more difficult path. A tough childhood and ordinary schooling did not keep his brilliance from shining through. He was a rank-holder and scored well enough in the entrance examination to be able to pick mechanical engineering at IIT Powai. However, while 80% of his classmates flew off to the US, he chose the nationalistic path and wanted to make a mark in India. After 10 years in industry, he felt that he had acquired the skills to turn entrepreneur, but there was no escaping the school of hard knocks. Chaudhari narrates the story of how his karma led him from innovation in pollution treatment equipment for sugar mills to ethanol distilleries, a global footprint in bio-fuels and from there to the challenges of climate change

ML: Could you tell us something about your childhood?

I was born in the interiors of Maharashtra – my mother’s family was from Sholapur and my father’s from Ahmednagar. My grandfather was a freedom fighter who died when my father was 12. There is a school named after my grandfather in Ahmednagar in the memory of his work. My father was a graduate in agriculture and worked in a sugar mill. I was four or five years old when my father took up a job in a sugar mill near Shirdi in Maharashtra. Schooling was difficult and we travelled by bullock carts. On Saturdays, we looked for gobar (cow dung) that was used to coat floors and courtyards. My father felt bad that his children had to do this work so, in 1958, when I was around nine years old, we shifted to a taluka called Phaltan in Satara district. That brought some stability. The school there was also reasonably good. My mother used to be a schoolteacher and got a job there. She was a graduate and had done her teacher’s training degree, which was rather rare then. I have two sisters and no brothers. From 1958, we had a reasonably stable life. That got disturbed in 1963 when my father, who was rather short-tempered, lost his job. We then moved to Pune which was a centre for education. I was doing reasonably well in school. In Pune, I got admission to a nearby school called New English School at Ramanbaug and was known for sports. It was a Marathi medium school, although it was called English School. I had a chance to excel both in sports as well as in studies. Our school did not have a tradition of scholars. So in the 11th standard, when I got a rank and was among the top 30, it came as a big surprise to the principal.

ML: Were you completely self-taught? Or did your mother coach you?

PC: No, my mother taught in middle school. I was mostly self-taught and I was also good at maths and science. I joined Fergusson College and that was the time I became fascinated with the thought of joining IIT. My cousin had failed to get in, which made me even more determined. I got a reasonably good rank in the entrance exam, so I had a choice. I wanted to do mechanical engineering at IIT, Mumbai, and I got both.

ML: Why did you opt for mechanical engineering?

PC: Everything mechanical was an obsession with me as also automobiles; that is why I chose mechanical engineering. Also, unlike chemical or electrical engineering, it was more tangible and I liked that. This was in 1956. So the first 17-18 years of my life were a regular middle class existence. I played a bit of cricket; I liked gymnastics and also took part in the usual elocution competitions in school – but all in Marathi. IIT was a shock. When I joined Fergusson College, a few of us were national merit scholars. But when you go to IIT, your ego gets punctured because everybody is either a rank-holder and a merit scholar in their respective states or even all-India rank-holders. The guy who stood first in Maharashtra – Sudhir Shete – was also in my class and, since mechanical engineering was very coveted, there were many other brilliant students. IIT gave a good opportunity to do different things – participate in sports and events and build camaraderie with others. Those five years were really good and I owe a lot to IIT. It was a turning point in my life, from the career point of view. In fact, only last week, I donated some money to IIT with a view of giving back something to the institution from which I got so much.

ML: What did you want to do at that stage?

PC: At that time, I believed that India would have a lot of foreign automobiles and I wanted to create a hub for automobile maintenance, which I thought would be an obvious need. It was a vague idea then but it didn’t materialise, although I did join an automobile company. I joined Bajaj Tempo after I graduated from IIT in 1971. Those days, nearly 80% of my classmates went abroad for their master’s degree and most of them didn’t come back. But somehow, I was more nationalistic. I wanted to hang around here and try my luck. But then I did a little business with those who were going abroad. Those days, you had to apply to 10 or more universities simultaneously and there were no computers. What you had were transcripts on thick sheets of paper. I came up with the idea of making the transcripts on onion paper, which weighed less and the cost of postage dropped. I collected some money and got the format of the transcripts printed on it. It became so popular that we had to do a second print run when the word went around that people could stretch their limited budget by using that paper. We even had different colour schemes for different years.

ML: So you didn’t do your master’s?

PC: No, I didn’t even try for any specific admission. I went for a job. I was actually selected by ACC Ltd, but there was a communication gap. I thought they had selected me for the maintenance side of their cement units and I didn’t want to become a maintenance engineer; I wanted to work on the shop floor, so I joined Bajaj Tempo. There is some background to that too. Bajaj Tempo is run by the Firodias and they belong to Ahmednagar. Their grandfather and my grandfather were contemporaries and they had a lot of regard for our family. Arun Firodia is also from IIT Powai – he was four or five years senior to me. That probably influenced me too. It was my first job as a trainee engineer. They had just launched the diesel version of the Matador using an old plant from Germany, which they had dismantled and brought to India. When they started the new machine-shop, most of the troublesome workers were shifted there; while dealing with them, I got to learn a lot in terms of dealing with workers as well as a new machine line that was entirely imported. There was a hydraulic system that wasn’t working as well in India, because it was built to operate in a cold climate. There was also pressure to churn out components on time. All these complexities gave me good experience. The oil shock of 1973 had generated good demand for two of Bajaj Tempo’s vehicles – the Luna and the Matador – which had a diesel engine. I got some promotions and eventually became the manager on the shop floor. However, I was beginning to realise that having only production experience was not going to help me in my ultimate goal of doing something on my own. Right from my IIT days, I wanted to do something on my own; initially, it was the thought of setting up an automobile shop. So I had acquired experience in dealing with labour. I also had production experience. I now needed commercial experience. I then got a chance to work for a cutting tool company called Widia India – which is now called Kennametal. It was based in Bangaluru. They had a small set-up in Pune and its competitor was Sandvik Asia which was Pune-based. Widia needed to expand and take advantage of new opportunities here. So I applied and got the job of as sales engineer in 1975, after working at Bajaj Tempo for four years. Widia gave me a chance to understand the commercial and servicing aspects of the business. Widia’s market share in Pune was barely 5%, but I had a chance to work with customers like Telco, which was expanding very fast, SKF, Kirloskar and Bajaj Auto. We had a very dynamic German managing director, Rentrup Wintergalen, who was my second mentor; HK Firodia being the first.

Under my MD’s influence and guidance, I learnt to fight Sandvik in the Pune market. It was like working in the lion’s den. In the next five years, we grabbed a lot of business. Telco was our real battleground. Telco was putting up a new machine-shop, so the strategy was to get in early and ensure that the machine was tooled up with our cutting tools and designs or join in their experimentation. The Pune customers were disciplined, professional and encouraged experimentation. That allowed us to increase our market share to over 55%-60%. I got a lot of promotions – in fact, I was promoted almost every alternate year – sales manager, regional manager, then zonal manager, all in just five years. So the next big move would have been to shift to Bangaluru. But by then I started to feel that it has become a numbers game and I was only doing more of the same thing. I had also completed almost 10 years after my graduation. I had told myself that, by the age of 35, I wanted to start my own business.

ML: Did you still want to start an automobile workshop?

PC: No. By then, that dream was gone and I wasn’t clear what to do. I had knowledge and experience of machine tools. Those days, there were two companies that had been started by ex-Sandvik people – one was Drillco and the other was Rapicut. They invited me to join them and I joined Rapicut. I took a calculated risk for a year and a half to check if I could make a career in cutting tools. Cutting tools are very small pieces and, although margins are good, you have to sell a lot to get the volumes. At the same time, since Sandvik and Widia were well established and a couple of new ones, such as Indicarb, were in the pipeline, I thought this was not going to be my cup of tea. I knew that I wasn’t going to be in the automobile workshop or cutting tools and machine tools; but I didn’t know where to start. So we started with the fabrication of equipment, which is a low investment activity. There are companies, such as Larsen & Toubro, which carry out fabrication of equipment, but of a different size. There was also the possibility of getting designs from someone else and working on them. So I started on fabrication and a distant cousin of mine became my vendor. He said, “I will get the business and we will do it together.” Another cousin, who was also an IIT-ian and was working in the Middle-East, wanted to return to India. He had some surplus money and so we bought a plot from MIDC together. Since I was working at Rapicut, my wife and my cousin became partners in the enterprise. The name Praj comes from my name – Pramod – and my cousin Raj. The company was dormant for two years but, after I resigned from Rapicut, we revived the company to start the fabrication work. This was in 1983-84.

We realised that we must have a product line – being a sub-contractor all the time was not good. One thing I had learnt at Widia was that often small companies that are vendors for the big guys are set up by self-employed engineers. They initially get a kick out of doing something on their own. But over a period of time, they are at the mercy of the big companies because they do not have their own product. I have seen many small units going out of business after being squeezed mercilessly by purchase managers of large companies. I didn’t want to be a sub-contractor for long. I knew what not to do, but wasn’t clear what would be my own product. Since my father was from the sugar industry, I visited several sugar units to explore the scope for future products. Sugar companies had little exposure to developments in terms of management, technology and equipment. After a survey, I made a list of 20 items, such as dust collection systems, continuous centrifuges, etc., which we could supply. One such item was continuous fermentation for alcohol. Traditionally, the sugar industry used to convert molasses into alcohol using batch fermentation techniques; the equipment was supplied by fabricators based in Gujarat. They worked with copper and were called kansaras; they were from Navsari. There was no upgradation in process technology for nearly 30 or 40 years and I thought that was an opportunity in 1984.

I didn’t know much about chemical engineering, so I contracted a consultant who is now my CEO (Shashank Inamdar). He is a chemical engineer from IIT. I told him what I was planning to do and asked him if he could give me the designs. At the end of 1984, with those designs and some fabrication skills, I put together a proposal for a distillery for the sugar industry using conventional technology.

ML: How was this different?

PC: In the first round, there was nothing different. I needed to get a foothold in the industry, so all we were looking for was to replace the Gujarat supplier with a local supplier with turnkey responsibility and more realistic costing. We had this customer from Sholapur, but he set three conditions for us. In 1984-85, the government had passed the Environment Protection Act, which put distilleries in the red category requiring them to install special pollution control equipment that was liable for scrutiny. That had scared the sugar mills. The chairman of this sugar mill said, “Your proposal looks fine, but you have not set up a distillery anywhere. So, my conditions are – you must get environment clearance, basically for pollution control, arrange the finance and get all the requisite permissions from the Maharashtra government.” And, he wanted me to fulfil these conditions within three months in order to get the contract. I went to my IIT colleague, Raj Nair, who was a consultant. He helped me make a proposal to SICOM, which gave me an in-principle approval for finance through the financial consortium within a month. The pollution control department also liked our proposal. The most important thing is that they appreciated the fact that some qualified IIT engineers are trying to do something different. In fact, my experience with the bureaucracy has been completely different; I owe a lot to their progressive attitude. Within three months, I had fulfilled the conditions and got the contract. It was a very small turnkey contract, for Rs83 lakh, and everybody realised that they were paying a lot more to suppliers from Gujarat. So pretty soon, there was a queue of people wanting to give us business, but we had a very small workshop.

That is when large companies, such as Alfa Laval, also woke up to opportunities in the alcohol industry and launched a continuous fermentation process with Swedish technology. We realised that if a multinational company is entering the business, the market has got to be much larger. So we also looked for a partner and identified an Austrian company offering similar technology. Unfortunately, they had tied up with a Gujarat company, which had not brought the technology into India, but merely blocked it; we could not get it unless the Austrian company cancelled the other tie-up. They told me that if I managed to get an order within a year, they would cancel their agreement with the Gujarat company and give me the technology. That required a specific order backed by a bank guarantee.

Fortunately, Bank of Maharashtra supported me and gave me a Rs500,000 bank guarantee without any margin. We got the technology. Unfortunately, pollution control became a big problem. The soil was porous. So we decided to use a technology that would burn up the effluents – we borrowed this concept from the paper industry abroad. But the customer said that since this system was not tested, I must install that equipment at my own cost. This was one-third of the cost. I agreed.

ML: Wasn’t that a big risk?

PC: Yes it was, but I was a gambler. I had done that repeatedly. But there was another problem. After we built the plant, there was a drought in Maharashtra and sugar mills began to close down. I had raised the money to fabricate the equipment through suppliers. I was badly stuck and then my real misery started. Creditors became impatient and banks would not discount the bills. Then, a stockbroker agreed to get the bills discounted by a bank but, in return, I had to give up 50% of the ownership of Praj. I was desperately trying to get the funds released. I had a monthly pass on the Deccan Queen train to travel between Pune and Mumbai to find a solution. That is when I read about India’s first venture capital fund in a magazine called Update. I read it and went to meet KS Nadkarni, who was in charge of venture capital in ICICI. His first reaction was that the venture capital division was meant to develop new technology, but this technology was already tested.

I told him that my situation was like the person whose father is not allowing him to borrow money and mother won’t let him beg. Anyway, he took me to meet N Vaghul (then the chairman of ICICI), who probably saw some sincerity in what we were trying to do. Those days, the venture capital rules were not yet fully firmed up. So Nadkarni had a multi-disciplinary committee to evaluate the project and agreed to finance us. I was sanctioned a royal sum of Rs45 lakh to cover my creditors and install balancing equipment. Of that, Rs4.5 lakh was equity and the rest was a conditional loan. This was in October 1987 and, with great enthusiasm, we cleared the creditors and began to implement the project. But the technology improvement that we were planning didn’t quite work out; we were 70% successful, but it didn’t burn the effluents entirely on a continuous 15-day basis. However, the distillery was running well and I got an order for a second distillery. But the money that we got from ICICI was spent and Praj’s money was not being released until the pollution control technology was proven.  

ML: What happened then?

PC: Well, we had done a job for another distillery which gave us the reputation of offering a superior technology and at a lower price. Around then, the government in Maharashtra changed and our first customer became a minister in the new government – Sharad Pawar. He liked our work, so he asked the cooperation department to re-look at the condition of not releasing any money for the work that was completed, even against a bank guarantee. So our money was released and that gave us cash flow. In the bargain, the project had become expensive and we lost heavily on it. We got another order from Polychem but the pollution control technology didn’t take off. However, we did very well on the distillery side. In 1988-89, we got our first breakthrough from Shaw Wallace, just after Manu Chhabria took it over. We got another order from Tamil Nadu and one from UP. Since then, we have not looked back with our continuous process technology. But we realised that the Austrian technology required a lot of local modification to adjust to local working conditions. So we set up an R&D division, which became the backbone of our future growth. We began to develop processes and parameters that would withstand dirty molasses, dusty conditions and high temperatures. Soon we began to increase our market share and catch up with Alfa Laval, which had 50% of the market. Very soon we did better than them and, by 1990-91, we had zoomed ahead.

In 1993, ICICI wanted an exit after our investment was transferred to the independent venture capital company TDICI. We had to choose between buying them out or go public. We decided to go public in January 1994. At that time, we were doing only alcohol distilleries, but while going public we worked on our future strategy and added brewery as a new line of business. As opposed to molasses-based products, we got into grain-based alcohol. One reason was the move to decontrol molasses. By then, we had begun to hear how countries like Brazil and USA were using alcohol as a bio-fuel. We thought that was a good opportunity too. So, in 1994, we worked on a growth plan, decided to go international and to diversify. Liberalisation had just begun and we began to look at South-East Asia, which seemed like a good opportunity. I had decided to work on countries that were 30 degrees plus or minus from the equator. But India’s image was not good, especially for technology transfer. So I found a Chinese partner in Singapore who was in the alcohol business and was ready to have a minority stake.  He helped us break into Indonesia, Thailand and the Philippines.

ML: Did he take a stake in Praj? And what was your competitive edge compared to multinationals, such as Alfa Laval, who were also in the business?

We formed a separate company called Praj Far East, based in Singapore. So between 1994 and 1997, we did well. Basically, our edge was in R&D and in offering total turnkey solutions. While Alfa Laval was making equipment, we had expertise in the process, design and equipment. At Praj, we focus on process, which is then converted into design and equipment to create a total solution – right from raw material to pollution control. That gave us an edge, especially since our process is designed to suit specific local conditions. This focus on process helped us in our international expansion as well. Today, Praj has the unique position of having operations across all five continents in both, the sugar and starch platforms.

After our IPO, we entered breweries and also looked at certain diversification into agri-processing, based on McKinsey’s report which said that food processing would become a big industry in India. In anticipation of that, we had diversified into food processing equipment, but that did not succeed and we made a loss in 1998-99.

ML: What kind of equipment is this?

PC: This included dryers, evaporators and dairy equipment. That was the time when the liquidity crunch in India had led to a recession of sorts and several companies suffered badly. Added to this was the South-East Asian crisis. We closed down certain businesses as being unworkable and had to retrench people. We then decided to focus on bio-fuels and expand to other territories and geographies. That strategy worked and we were the first Indian company to go to South Africa, South America and central America – Columbia, Nicaragua and Guatemala.

ML: Aren’t these considered rather dangerous countries to operate in?

PC: Yes, but our boys showed the courage to go there.

ML: How did you get the idea of going global?

PC: In 1995, I went to Harvard to do the Advanced Management Programme, because things were looking good. That helped me in decision-making and in anticipating emerging situations. After we made a loss, I decided that I had to lead from the front and go back to living out of suitcases. I also went back to the capital market to raise some money, since half our net worth was wiped out in a single year. At that time, Ajay Kayan, a stockbroker of Kolkata, bought our story and supported us by buying Rs five crore of our Rs10 share at Rs20 (the same shares had gone up to Rs285 in 1995-96) but Kayan’s condition was that I must also pick up some stock along with them to build their confidence. I had to buy to the extent of one-third of their purchase which I did through a personal borrowing. But we came out of the situation rather fast with some belt tightening and cost cutting. By 2001-02, the share price touched Rs60 and the Kayan group exited. Then, in January 2004, Rakesh Jhunjhunwala came in. By that time, our Latin American ventures had begun to show results.

ML: What was your strategy of setting up these businesses abroad?

PC: What we did was to work closely with domestic industries and get under the skin of their way of working. For instance, in Columbia, the domestic sugar market is allowed to sell at a higher price in the local market and they lose money on exports. So we proposed that the excess sugar that is exported can be converted into alcohol – that will reduce the import of oil, give better realisation and decrease pollution. They liked the idea.  

ML: But why didn’t Brazil, which is the world leader in using bio-ethanol, go to them with the same idea?

PC: I will tell you. Brazil makes alcohol from cane juice, while Columbia makes it from molasses and they needed that technology. Secondly, the price of sugarcane in Brazil is very low – barely $10 per tonne in other countries, including India, it is twice as much. So when the price of cane is higher, you have to apply technology to get the best realisation and results. If the raw material is cheap, you are under no pressure to do it. That is why we are able to make inroads by offering better technology, energy efficiency and pollution control. In fact, it was a blow to Brazil that a company from far away India had bagged all five projects.

ML: What about language problems?

PC: We went about it rather systematically and put in a lot of effort to teach our boys the local language and customs. Fortunately, there was a Columbian lady married to someone here and she taught our people the language and culture. It also was an attraction to our people to travel all the way there for work. These countries have been nice to us and we didn’t find it dangerous. In Africa, we are in Malawi, Swaziland, South Africa, Kenya, etc.

ML: So the next turning point for Praj was the sudden confidence in the future of bio-fuels…

PC: It may seem sudden but there has been a natural progression over three decades. I will capture the inflection points for you. The first was in 1973, when the oil shock led countries like Brazil to get into ethanol. The second was in 1988, when the US began to look at bio-fuels because of the corn lobby. Then, in 1997-98, California came up with the finding that MTBE (methyl tertiary butyl ether), a fuel additive, is also contaminating groundwater and it became a big issue. They found that ethanol too was a good octane enhancer, so blending of ethanol became attractive and important. In 1999, when I raised money for the second time, my entire story was that bio-fuels are going to become important; this was based on our experience in Brazil and Africa. At the beginning of 2003, the start of the Iraq War raised questions of oil security and, more recently, worries about climate change have increased awareness. But 10 years ago, MTBE was the biggest factor for the drive to bio-fuels, not oil prices.

In 2001-02, when we decided internally that our future was going to be based on bio-fuels, one of the calculations we made was that feedstock would become a challenge. One of Praj’s advantages was in anticipating the food-fuel issue and shortage of feedstock. We began to look at non-food energy plants and hit upon sweet sorghum. While ordinary sorghum, commonly known as jowar, is a staple in some regions, sweet sorghum is cattle feed (it is known as kadwal in Marathi). This crop can be grown in less than four months and has almost as much sugary substance as ordinary sugarcane. This is, indeed, a wonder crop; we began experimenting with it by bringing seeds from Australia and elsewhere, acclimatising it to local conditions and conducting various trials on it that have given excellent results. We realised it was a crop worth developing as an alternative feedstock for energy. We also got it registered with the government. The ratio of output to input in calculating energy is very important. The calorific value is as high in sorghum as in sugarcane. That is very promising. We saw three elements to the sorghum crop – a cob where there is small grain, a stalk that has sugar, foliage that gives biomass and also cattle feed. Today, Praj is recognised around the world because we identified sweet sorghum first and we are conducting trials in 18 countries. There is a similar story in bio-diesels which is impossible to develop from sunflower or rapeseed. So crops, such as jatropha were identified, but things have yet to come to maturity. Then there are second-generation sources such as ligno-cellulose. It is a hot topic today. On the bio-diesel side, algae is very promising because it consumes very little water and is easy to grow. So at the moment, until technology develops, sweet sorghum is the intermediate step in petrol and jatropha on the diesel side.

ML: Is it a worry that farmers are switching from food crops to more lucrative non-edible energy crops?

PC: Well in countries, such as Brazil and the US, which have a large land mass there is no real issue and growing energy crop will be attractive because statistics show that not more than 20% of the land mass will be used for fuel crop. Also, the new energy bill has put a ceiling on use of corn for fuel. In India, it can be a big problem. We will have no choice but to go for grasses, algae and jatropha. But farmers will switch to fuel crop only when there are regular buyers and a processing capacity and technology for its offtake on a regular basis.

ML: And what is the significance of the Tata stake in Praj?

PC: The Tatas have a 7.2% stake. They are basically looking at bio-fuels as the future, so they have probably taken a small stake in the company. Three things happened simultaneously. Kishor Chaukar came on the board as an independent director, because we know him. The Tata Sons’ stake was completely independent and Tata Chemicals was talking to us separately because they want to put up a sweet sorghum plant. They are all three independent actions.

ML: Where do you see the future of Praj?

PC: Well, we see the future of Praj in bio-fuels. There is also an emerging agenda in industrial biotech, which has yet to take off. Bio-pharma has taken off, agri-biotech is taking off but industrial biotech, what is called white biotech, has still to take off and I think Praj has a mandate to do work in that area. When we talk about bio-fuels, we think bio-butanols as the next level. Once we crack the conversion of grasses and straws into sugary substance, it will open a lot of issues.

Biodegradables is going to be a big area. E-waste is a big issue, to substitute with biodegradable material. We have already started an industrial biotech division and are putting up a world-class R&D centre in Pune with the money that we got from Vinod Khosla and others, which will be commissioned this February – for the first time in the private sector. My personal view is that, ultimately, it is solar energy that gets converted in plants through photosynthesis and, in this area, India has a big asset that can be deployed gainfully. I believe that agri-processing will be big and we may also have bio-fabrics.

ML: What about your personal involvement in Praj and your succession plans?

PC: Well, I have already gone on record to say that as far as ownership is concerned, we want to democratise ownership. We already have three to four people in the 7%-10% ownership range – Rakesh Jhunjhunwala, Tatas, Vinod Khosla and Morgan Stanley Mutual Fund. We would welcome some more players if they are good. That is because we are in a business where control will not bring results. What will work is an assimilation of various resources. We have had a chance to learn a lot from other areas. Family-wise, I have only one son who is studying and he will make his own decisions and need not join the company. We are professionalising the management. Shashank Inamdar, who has been with us for 22 years, initially as a consultant, has now become the CEO and managing director. We are also recruiting a lot of professionals for R&D. I see the company going the way Larsen & Toubro has developed.

ML: But every company needs a single leadership.

PC: Frontline leadership is different. I wanted to step down at 55, but I did it last month when I turned 58. I am hoping to be out by 65. I hope I am able to do that on time. There is a lot of talent and I am sure the positions will be taken. Community leadership is also a concept, let us see what happens. But I think the future is very exciting because the platform is ready for take-off. We have a unique positioning which is global and industrial biotech is a completely new business.

ML: How did Vinod Khosla’s investment happen?

PC: You may find it hard to believe, but one fine day, I got an email saying that Vinod Khosla would like to talk to me. Until then, I didn’t know that he had evolved a very strong passion for bio-fuels. We had a 45-minute conference call after which I met him at Kellogg’s Business School. He is funding 12 or 13 start-ups in biotech. I said that these companies are start-ups in certain specific areas and there are many steps involved in taking these to the level of full-scale plants. Praj has some experience in converting inventions into commercial plants. He perhaps liked the idea.
ML: Won’t they be potential competitors?

PC: Not necessarily. We can be their licensees. Many of these are start-ups in the US, so if you have to put up a plant in Thailand, who else is better than Praj to do it? In fact, for biotechnology, this kind of collaborative effort will become very important. To take a process from the lab scale to development stage and then to commercial stage involves a lot of work. Then again to increase the production from a flow of 1,000 litres to 10,000 litres and then on to a million litres, involves a completely different set of physical dynamics. I think, Vinod Khosla appreciated this fact. That is why he made an exception in our case by taking a stake in a listed company. He sent someone for a half-day due diligence and decided to take the stake, although it was an expensive entry for him. We meet him once in a while and it is always very energising.

ML: What would be your advice for entrepreneurs today? You worked in an entirely different, regimented and closed economy, but things are different today. What is your understanding of risk for Praj?

PC: Yes, the challenges are different. But the basic recipe – hard work, innovation, perseverance and patience – remains the same. You can change the clock by a decade but it doesn’t make a difference. As for risk, a simultaneous worldwide drought could be a big risk, or if oil became $20 a barrel, that would be a risk because people would say, let us burn it. But one has to take cognisance of the fact that climate change could cause drought and this has made us look at the larger picture, which includes development of the CSR (corporate social responsibility) arm of Praj. My wife and I spend a lot of time working on mitigating the impact of global warming and climate change.

ML: How are you doing that?

PC: Well, the first thing is to walk the talk. We have a green group looking at aspects like canteen to transport, to go green. Secondly, we have taken the mandate to educate at least 100,000 school children in Pune on these aspects and encourage them to think about issues of climate change and biotechnology. This is through awards and essay competitions. The third thing is to set up an institute for sustainable development as a social venture.

The ‘triple-bottomline’ concept is going to be very important – you have to make profit in the business, you have to care for the people around you and you have to take care of the planet – and that awareness has to be created at every stage – among employees, managers, entrepreneurs and in innovation. We are looking at this as our mandate. We have to thank Khosla for triggering it. When he came here, he told our people, “you are not working for Praj, you are working at solving the global climate change problem, look at your work from that perspective.”

I thought that was so inspiring. We are doing well and our share prices are going up but the larger picture is also important; otherwise, you are only playing a game of numbers. So we decided to focus our CSR effort in this area. After all, you don’t require an endless amount of material things to lead a purposeful life.


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