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How Keki Gharda stunned the MNC giants

May 12, 2007 12:53 IST

Once upon a time he used to bite pens. Now he fidgets with a knife in a cramped office lined up to the ceiling with books that range from Game Theory to the history of the Roman Empire to polymer science. Whether as a businessman, or as a technologist or as a human being, Dr Keki Gharda is an iconoclast.

Battling the business climate of the '70s and '80s, he has built a business through sheer innovative brilliance. Gharda completed his chemical engineering in 1950 from the Bombay University, Masters from University of Michigan and his PhD from University Of Oklahoma.

In 1965, he started his company in a small rented shed with a drum as a table and a carboy for a chair. Over the next four decades Gharda Chemicals has repeatedly flummoxed multinationals like Sandoz, Bayer and Hoechst by making their products at a fraction of the cost through technological virtuosity.

In the process it has recorded many firsts in dyestuffs, pesticides, veterinary drugs and polymers which have fetched dozens of awards from the government and industry. In 2004 Gharda became not only the first Indian but also the first Asian to win the prestigious Chemical Pioneer Award from the American Institute of Chemists for his extraordinary achievements in the chemical industry.

He is now setting up his dream project, a top-notch technical college a few hours drive from Mumbai. Excerpts from an interview with MoneyLIFE editors Sucheta Dalal and Debashis Basu that was punctuated by many jokes, wisecracks and funny anecdotes from a young man of 77.

Let us begin with your background. We gather you are born and brought up in Mumbai and that you have two older sisters?

Yes, so legally I am a 'Maharashtrian', but can't speak the language. I had two sisters but one of them is already dead. One sister is still alive, she is about five years older than me and she is the mother of the children who, shall I say, don't see eye to eye with me.

Of course, we meet at family functions. Let me tell you about them. From practically nothing, they are both worth about $ 5 million each, but they think it is too little. They hold some shares in the company and I have told them if you settle for that value, I can get you the value. They say they are worth more. So I said, okay, if that is so, wait until you get it (laughs heartily).

Incidentally, they have received more than a hundred times the initial investment of their father by way of dividends. Even at 77, I come to office everyday and work from around 10.30 to 6 pm. Of course, occasionally I get to catch a nap for an hour.

And you find time to read all these books lined up in your office?

Yes, it does look like I run a bookshop as a side business doesn't it? I don't (laughs). I don't read here. But yes, I have a rather catholic taste in books and subjects to read. I have read widely and by the age of 15 or 16 I had read all the English classics and all the German and Russian Classics in English.

I could read a 500-page book in a day, it is a peculiar form of rapid reading that I have evolved myself. I would glance through the page almost line by line and if it is a description of a house or a room, or the protagonist, I would skip through. In around eight hours I could tell you reasonably well the contents of a 500-page book.

Can we go back to your childhood so that we go a little chronologically?

Well okay, my father was a government servant and my mother was a housewife. Not just a housewife. Although she was taken out of school when she was 12, she had a very high degree of curiosity and her father was a practicing medical doctor. He had a superb collection of books and was very widely read. The remarkable thing about him was not only his collection of books - they were all literary books - he could even quote the act and the scene from Shakespeare of a quotation.

Even at that age he had a tremendous memory and I have inherited a significant amount of that. Nobody in my company, or even nobody that I know, remembers as many melting and boiling points that I know. It is not a conscious act, it just registers, once I have read it. On the other hand, don't be annoyed if I don't recognise you after 15 days or a month. Its selective, you know!

Another thing about my grandfather was that although he had a flourishing practice, he did not charge the poor any money. In fact, he would give them money to buy milk or food so that the medicine was more effective. That influenced me in a big way.

Sub-consciously, I believed that if you are clever or gifted, that does not belong to you. I am not modest about my talents. Over a period of time I have realised that I have unusual talents. To put it in another way, if I see a document on any subject, I see something in it that nobody else sees. It is a gift, that's all.

You know the Stradivarius violin? It auctions at over a million dollars today. Somebody asked him, 'Senor, what is the secret of your talent'. He reportedly said, 'all talent comes from God, but even God needs a Stradivarius to make a good violin'. Hence I feel that although I have unusual talents, they don't belong to me. I am just a trustee.

When it came to my teachers too I just knew what they were teaching. For instance, when I studied at the Royal Institute of Science, one of my professors was quite a pompous man who expected us to take notes when he was teaching. But I used to just write the title of the lecture on the page and didn't take notes, since I already knew it.

One day, he noticed I wasn't taking notes and said, 'Mr.Gharda, I assume you know what I am teaching'. I politely replied, 'Yes Sir'. That made him furious. He said, 'In that case, why don't you go to the board and finish what I am doing'. He was writing some theorem or equation. I went to the board and finished it. He was dumbfounded and there was tittering in the classroom. But being a normal human being, he naturally didn't like me.

Were you a topper in college?

I was a topper in school but not always at the top of my class in college.

Was it because you were reading more, or were you more distracted with other things?

I didn't like the way one needed to study to get to be the first in class. So I used to read widely about the same subject and other things. But I was not low down...just second, third or fourth. There is an interesting story about my rank.

The person who stood first in the matriculations in my batch was Madhu Patwardhan (once chairman of NOCIL). I became quite friendly with him later. I stood 48th or something. Madhu Patwardhan was a thorough gentleman, with long sideburns and all that. I am also a gentleman of sorts but not a thorough gentleman (laughs).

We were both in Elphinstone College. He got the top scholarship and I didn't and that was fair. We left inter-science in the same year and both of us joined the Royal Institute of Science. There, oddly enough, we had the same number of marks. There used to be small scholarship of about Rs 100 a month. We both applied for it and he was given the scholarship and I wasn't. So, the same professor I talked about earlier, was the Principal. I went to him and said, 'Sir, you have given the scholarship to him and not to me. Neither of us really needs the scholarship, but it is a matter of prestige. You could have divided it into two". He said, "His performance was better in matriculation. He stood first". I said, "All the more reason you should give it to me. I have come up while he has gone down". Mind you I was 16 at that time, but I didn't take any gaff from anybody.

You have said somewhere that you went abroad because you didn't get along with your Ph.D guide. What is the story behind that?

The guide was Prof. GP Kane. His father was a very famous Sanskrit Scholar (a Bharat Ratna). He was a very clever man, but then I was also a clever man. And while I was usually right in what I said, he was often wrong and I had the gall to point it out.

Naturally, he didn't like it. He once said that a particular problem in an American textbook couldn't be solved because there wasn't enough data. I went home and studied the problem and found it could be solved.  He wasn't malicious. In fact, he even acknowledged that I was bright.

You have also mentioned that you used to sell chemical reagents to your college. Tell us about that.

When I was in college, I used to leave home around 8.30 am. My father used to give me some money for snacks - about Rs 5 or Rs 10 per month, I don't remember. At that time the British were at war with Germany. Most of the chemical reagents we were using were suddenly cut off. The British didn't make any reagents. So whenever I asked for a chemical it was not available. So I said, let me start making them at home.

From my pocket money I used to buy chemicals such as caustic soda, sulphuric acid, nitric acid etc, muddled around at home and made reagents and I would sell them back to the college. If the college maintained records from 50 years ago, you can see receipts of Rs. 5 or Rs 7 or Rs. 7.20 made out to me. I used to make around Rs. 50 a month.

After this, I graduated in chemical engineering from Bombay University in 1950 and stood fourth. By the way, the first Dr Keki, Ghardarank holder went broke 15 years later owing me money, which I did not attempt to recover out of sentiment (laughs).

Then you went to Michigan University?

Yes. I will tell you why I went to Michigan University. I had applied to both MIT and Michigan, both of which had top chemical engineering departments. I got admission in both. But MIT said that admissions for that September semester were over and they would admit me only the next year. Michigan gave me admission for the same year and the fees were also much lower. So I went there.

My father paid my expenses in the first year. After that I appeared for a qualifying exam. Very few of the natives used to pass that exam (laughs, and explains that he used to call the Americans, natives), even though they did their under-graduation there. It was a peculiar exam, because they could ask you any random question - physics, chemistry, mathematics or even local politics.

They basically tested you if you had an inquiring mind. Coincidentally, during those exam days an "art" cinema, showed operas and ballets. Since I didn't expect to succeed - nobody usually succeeded the first time - I used to visit the cinema almost every other evening. But I did get through the very first time and got a scholarship.

So my father didn't have to send me money anymore. Interestingly, one year I got a Dow Chemicals Scholarship, one year I got a Monsanto Scholarship and one year the Dupont Scholarship - I don't remember in what order. Gharda Chemicals is competing with all of them. I even tell their officers that you bred a viper.

You came back when your father passed away?

I came back primarily because I had not visited my family for seven years. But when I returned, I discovered that my father was in the hospital. My mother had not informed me, lest I worry. I already had a permanent job as a college teacher at the University of Oklahoma.

My father died soon afterwards, catching an infection after an operation. My mother was all alone and although she was clever in all ways, she just couldn't manage the finances. So she requested me to stay on. My sisters were already married and had left the house. So I stayed. I wrote to the college and told them about the family circumstances. The University offered to hold my job for a year, but I knew I wouldn't be able to go back so soon.

I taught for a while at UDCT (University Department of Chemical Engineering). There too, like in the US, I followed an unorthodox teaching method. I said, 'I won't teach you what is in the textbooks. You are all going to hold responsible positions in the chemical industry, where there will be a huge price to pay for any mistakes that you will make. So I will not give you any special credit for the right answers, but heavy penalties for the wrong ones'.

But you didn't get a permanent job at UDCT.

Yes, I applied a couple of times, but for various reasons I was not given the job. I was never a full time employee. I only gave certain lectures, and I was fiddling around doing some consulting work for the chemical industry. There too, because I loved my work, I used to solve the problem first and then ask for money. That was a foolish thing to do. It is still a foolish thing to do.

So I didn't get paid most of the time. Luckily, since I come from middle class background, I had a home and my mother used to feed me. Soon after, I also got married without an income. My wife was the daughter of a college professor, who oddly enough, didn't consider money as important, so he allowed her to marry me. So we got married and we were both kept by my mother. That was around 1962.

When did you start Gharda Chemicals?

In 1965. For the first two years, we were a partnership company. Around 1967 it was reorganised as a private limited company. 

How did the idea come to you to start your own company?

Although the small scale sector didn't pay me, they knew me very well and recognised my talent. So they used to come to me and say, why don't you make this compound, it is not available, or make that compound because it is in short supply. So I thought of making phthalogen brilliant blue, which is a dye pioneered by Bayer.

At the time I made it, the dyestuff department of UDCT was in existence for over 10 years. But I don't think they knew how to do it, because by that time Amar Dyechem and Indian Dyechem Company were already in existence. And as the saying goes, fools rush in where angels fear to tread.

I thought I would be able to make it.  I did make it and that was the beginning. But I had to work all hours since I was the only technical person in the company. I often used to work past midnight.

Where did you function from at that stage?

At that time we had a 2000 square feet rented shed at Vakola (near the domestic airport in Mumbai), which was completely illegal, with uncertain electric power and supplies and no sanitation facilities. I used to pay the fellow rent, but the owner was running it illegally - the water connection was illegal, the power connection was illegal and if he didn't bribe the authorities, they would cut off the connection.

Sometimes I had to rush to the police and have it restored. My desk was a drum and my chair was a carboy and we had 10 uneducated workmen to make the product. Hence I had to work 16 hour shifts in a primitive factory. I was the procurement manager, sales manager as well as being the production manager.

Without any experience in dye stuff technology I realized that the product was a physical mixture of an organic moiety di imino isoindoline and chelated copper complex. I was the second in the world to make this product and within two years Bayer's exports to India had become uneconomic and I was competing with them in their other major market in Africa.

Did you face resistance from Indian buyers?

It took two years for our product to get accepted. Initially, there was a lot of phobia about Indian products versus those of multinationals. Everybody used to wonder how this little fellow, not even a mosquito, dare think he can compete with Bayer. But after a while people tried our product and found it was very good. You really need one big customer to accept your product.

At that time it was Century Textiles. If Century Textiles bought something, it automatically meant a seal of approval. After a long time, I persuaded them to test it by giving them the material for a free trial. They found that it was as good as the foreign material and cheaper.

What were the early lessons from the venture?

My first adventure in entrepreneurship taught me several things, mainly that an unknown company manufacturing a high quality product and selling it at cost based prices can compete effectively with a giant multinational company. After their sales in India and Africa had dried up Bayer visited me and photographed our primitive factory and went back shaking their heads in disbelief. Over a period of time we made further modifications of this product. For this technological achievement which appeared outstanding in India of those days, we received our first P C Ray Award in 1970.

That was your first product?

Yes. After about five months, when we were well accepted, along came a broker who offered to underwrite my entire production but wanted a 7 per cent discount. I pretended to be amazed. I said, 'in fact you should give me a premium.

You are buying it, not because you love me, but because you expect to make money and it will give you a monopoly position if you have my entire production'. This was a spontaneous idea but I eventually became a serious student of Game Theory. I have a whole shelf of books on Game Theory and can give a learned lecture to anybody who doesn't understand it (laughs).

Where did you move to from Vakola?

We moved to Dombivli (a Mumbai suburb) and the facility still exists there. Then we went into a joint venture with the Gujarat Government in 1980 called Gujarat Insecticides Ltd., which is now fully owned by us. For about Rs 3 crore (Rs 30 million) of investment they got a return of Rs 19 crore (Rs 190 million) over about 10-12 years and most of the value came from our technology. And since, unlike most  businessmen, I don't put my hand in the till and skim money out, the wealth grew.

You then set up a US operation?

No, that was only a marketing operation for our products. We have never really manufactured anything in the US. We export our products to them. The products that are manufactured in the US have a very small market in India and I was capable of making all of them. I am capable of making almost anything. Or, rather I should say we. But then I don't have a large deficiency of conceit! (laughs heartily).

Tell us about your various fights with the multinationals?

They were not really fights. In the mid 1970s, India was just beginning to use more advanced pesticides. The multinationals wanted manufacturing licenses in the control raj. So the government had a public hearing, chaired by a judge.

The MNCs made a big song and dance about how difficult and dangerous it was and how these cannot possibly be manufactured by an Indian company and so they should be given an exclusive license. Somehow, the judge, Justice Rangarajan had heard about me. He called me and gave me some papers to study. The products were Isoproturon and synthetic pyrethroid. I said they were slightly difficult, but not as difficult and dangerous as the MNCs were claiming. Anything is dangerous in the wrong hands. The judge personally invited me to the hearing at Delhi.

For the first day, lawyer after lawyer, representing the MNCs, made presentations. They gilded the lily, so to say. On the second day, the hearing ended and the summing up started. The Judge said, you claim that it is very difficult to make these products in India, but there is a lone voice of dissent. I want Dr.Gharda, who is here at my invitation, to give his side of the issue.

Is that the first time you spoke during the hearing?

Dr Keki GhardaYes, I had kept quiet all that time. I then stood up and said, there is a lot of exaggeration going on here. These are tricky and difficult products, but they are not outside the scope of an Indian company to make. I for one, hereby make a public statement that Gharda Chemicals is capable of doing it, and I offer to deliver it within a years time and at 60 per cent of the price the MNCs claim is necessary for them to make it. There was dead silence.

Justice Rangarajan waited for two minutes and said, 'What Dr.Gharda has said is absolutely contrary to what you have said; why aren't you dissenting'? Again there was a complete silence. I said, they are not dissenting because what I have said is the truth. This happened such a long time ago, but the lawyers who were there still remember it. One of them, I recall, was Anil Diwan.

Who were the MNCs?

Sandoz and Hoechst were there and there were two or three others.

Wasn't there another incident when a MNC copied a part of your process?

No not exactly copied, they just took out a small portion. It was Sandoz. They were using a chemical to do oxidation and I had just used air. It was an almost obvious thing to do, but it required some amount of skill to realise the obvious. Four or five months after I started this process, I head from sources that they had also stopped using Hydrogen Peroxide and saved themselves about Rs 15 to Rs 20 a kilo.

What was the product?

It was 2 hydroxy quionxaline. There is also another interesting incident. At that time Gharda Chemcals was making the same product for them on a contract basis. They made 50 per cent and we made the rest. We had settled on a 97 per cent purity because I was confident of delivering that.

Occasionally, it used to be 96.5 per cent purity and they sent it back saying purify it. We said, it doesn't make a difference even if it is 96 per cent, but they said, 'No, the contract specifies 97 per cent purity'. Then comes the funny part.

Their drier had failed and they sent their production to me for drying. And I discovered that their product was only 93 per cent or 94 per cent purity. I was furious and asked what was going on. But they said, 'a contract is a contract'. I said all right, my time will come and I will show you. Within three to four years after I set up Gujarat Insecticide they had to wind up that business. They couldn't compete.

Didn't you ever want to take Gharda Chemicals public?

No, for a very peculiar reason. I will gamble with my own money, not with public money.

But you have always been profitable, there was no problem about that.

Well, there is a saying, 'call no man rich until he is dead'. Yes, we have been profitable, but somewhere in the late 1970s all the products we were making suddenly became unprofitable because the government imposed a 35 per cent excise duty on dyes and intermediates. Since we were honest, we could not compete; many others just evaded the duty.

That year we made a good solid loss. But in one year, we changed our entire product profile and shifted from dyes and intermediates to agrochemicals.  In fact, we have made losses, once every five to 10 years.

In agrochemicals you did pioneering work.

Yes, but we are not doing well. We had to get over the problem of the monsoon affecting the sales. We started exporting. More than 50 per cent of our revenue comes from export. We are selling to Canada, Argentina, Brazil from the US office. We also have another office in London from where we cover Europe and North Africa.

We also export and import from China and our balance of trade is nearly equal. Our overseas foray has been very eventful too. In 1997 we started marketing Chlorpyrifos, an insecticide and Dicamba, a herbicide - monopoly products of Dow and BASF and we paid them about $5 million each as data compensation.

We had a tough time as they tried to convince our customers of the unreliability of an Indian producer and gave them bonuses extending into several seasons. But we have stuck it out and by now we have almost 20% of the US market in both products and our customers have grudgingly admitted our reliability and even our superiority.

You have also moved into polymers...

About six years ago, we started a high performance polymer division, where we make heat resistant polymers, amorphous aromatic sulfones and semi crystalline aromatic ketones. We are number two or three in the world in some of the products Polymers is totally different from chemicals and we had to learn by ourselves a new technology which had taken MNCs several decades to develop.

Hasn't any multinational offered to buy you?

Yes, many years ago Dupont offered to buy us at what I considered a good price. But my relatives didn't allow it. I have only a simple majority (60 per cent), but not the 75 per cent needed for significant management decisions. The dissenting shareholders are around 33 per cent. I believe that Godrej also holds around 7 per cent of the shares - directly or indirectly.

So what happens now? There is talk about you selling to the Tatas; is that going to happen?

Well, we shall see.

What happened to the university that you planned to set up?

It is already there, we will admit students in July. It is on the Bombay-Goa road, near Lote, pretty close to my factory. We Parsis consider the Spring Equinox as important, so we had an inauguration on March 21st. It is not a university at the moment. It will be a college affiliated to the Bombay University, under the All India Council of Technical Education. We are starting with four courses including chemical engineering and computer science.

How is it going to be different?

Well, for starters, it is going to be an honest university - no capitation fees. Actually it is registered as a Parsi University. The permissions were quicker under the minority quota. After all we are a genuine minority and actually a dwindling minority (laughs).

Who will you bequeath your wealth to?

I am the founder of the company and now I am almost 78. So passing it on to children would be the routine thing to do. But I have no children. I have a few relatives who have children. They and I don't get along well. They consider me a fool and I equally consider they are fools.

Why would they think you are a fool?

Well, fool in this way, that I have a lot of other worldly interests and they don't have any of those. So they feel that 'we are rich and still have to live as poor, why do you force it on us?' I say, I am sorry, I am the fellow who creates the wealth, so I am the fellow who decides how that wealth is going to be used.

Do they work with Gharda Chemicals?

No. Even my wife doesn't work with the company. And although she is a director, she doesn't even draw a salary. I am a little Victorian in my ethics, you see - No work no pay (laughs). For a number of years I worked for the company free. I drew just around Rs 500 to 1000 a month to live. After some time we began to be prosperous and I took a salary of Rs 100,000 a year.

My wife has her mysterious ways - she still maintains me on just Rs 5000 a month. She also earns some money by way of dividend from the company which she spends on all kinds of social work, which I don't get involved with. We don't have any servants in the house. So I wash my own clothes. Sometimes she washes some of mine and her own clothes. Three out of four days, she does the sweeping and one out of four days, I do it.

But why?

No particular reason. I don't think I am a masochist nor is she. We are in a poor country and I just feel that the amount of money one spends on minor luxuries can keep someone alive.  Right up to last year I used to travel by economy class and I always stayed in a 3-star hotel. As long as there are only two or three bugs in the bed I don't mind. More than that, I have to spend a lot of time throwing them out (laughs).

Long ago, when I was at an impressionable age, my mother said, "it is your duty to make as much money as you can honestly, but you have to die poor. You must give it all away to other people...obviously not my hapless relatives, but more deserving people.

Further, it is my duty to fight evil. Secondly, from the balcony of Elphinston College I had seen Mahatma Gandhi lead a morcha and I must admit I was a coward... I didn't want to be in the morcha and get beaten up by the police, but I had a great deal of admiration for him. 

So, the question remains. What about the future?

I am in the final stages of forming a company called Gharda Advanced Technologies Limited. There is the Gharda Foundation, which is running the mobile hospitals, the rural work and the college. As and when I sell my shares, which I do intend to sell, because I do not have any capable successors, I will invest in Gharda Advance Technologies. I have an excellent idea for this company.

Actually, it is more than an idea and we have almost got a patent for it. The global production of iron and steel is around one billion tonnes every year, with an average first stage price of about $300 a tonne. I am certain that I can make a 10-15 per cent difference to cost at the first stage.

This means a savings of about $50 billion. Aluminium industry is worth about $75 billion a year. I feel I can bring savings of about 30 per cent to that industry. That is another $18 billion. Then there is Titanium which should be promoted. It is a much smaller market.

Why only these? Why not copper and other metals?

Well, I am only one person. These are my ideas and the first one is novel but is so apparent. There is an interesting point of patent law. If you combine known facts in a way not done before, each fact itself may be known, but the combination can be patented. As I said, I can see things in the public domain that others can't see.

My English patent lawyer, who is a rather conservative person, is quite confident of us getting a patent on the iron project. We haven't reached the lab scale as yet. An experimental model of what we are planning will itself cost  Rs100-Rs150 crores (Rs 1-1.5 billion). We are gathering bits and pieces of the data on a lab scale.

How do you sell the idea? You have to demonstrate it and show that it can work 8000 hours in a year. You don't want it to break down every 100 hours because these are large continuous processes. So you have to demonstrate reliability. This is what we are going to do.

At the moment we are spending around Rs 15 crore (Rs 150 million) on aluminium and titanium processes where around 40 people are working. All this will be put into Gharda Advance Technologies. I am not a fool, you know. Dr.R.A.Mashelkar, former Director General of CSIR has agreed to become the chairman of the company, because I have been able to convince him.

Will this new company be 100 per cent owned by you?

Yes, yes, yes, definitely. What I am planning to do is hold 75 per cent of the equity and the remaining 25 per cent will go to some of my employees - about 2 - 3 per cent to each of the scientists and other managers. If this works, we will easily be able to get $100 million of knowledge income in the first year. I am confident that the ideas will work.

Photo: MoneyLIFE

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