Growing A Legacy

By integrating businesses seamlessly and scaling up prudently, DCM Shriram has done enviably well in an unpredictable sector.

- Himanshu Kakkar

There is the Buddhist story of a boy who turned a dead mouse into a fortune. He built his riches step-by-step, by imaginatively reusing every bit of trash he found. He successfully traded the rodent for honey, later dried twigs for pots and finally bundles of fresh grass for jewels. The last was bought by wealthy merchants looking to feed their tired horses. It is a long story but the moral is simple — everything can be mined for gold, if you can spot the vein. DCM Shriram, the 120-year-old diversified conglomerate, has displayed similar ingenuity in mining gold from the various businesses in their basket — however boring and unglamorous they may be. The Shriram brothers — Ajay, Vikram and Ajit — who run the show now were handed down a troubled business after the partition of the legendary Delhi Cloth Mills founded by Lala Shri Ram in 1909 as a textiles company. They were once to Delhi what Tatas were to Mumbai, even opening institutions of excellence such as the Shri Ram College of Commerce (for higher education) and Shri Ram Centre for Performing Arts. Then, in 1990, the group was split into four among Lala Shriram’s sons and their heirs. DCM Shriram was born with the three grandsons inheriting Kota complex (with chlor-alkali and PVC units in Kota, Rajasthan) and the textile business in Delhi’s Moti Nagar.

Diversified businesses were the norm during the licence raj when there were constraints on capacity addition – the only way to expand a business was to find new business lines and/ or form new companies with new capacities if the licenced capacity was breached. After the mid-nineties, diversified businesses went out of fashion as the market refused to fairly value conglomerates. That’s because investors no longer fancied buying a bunch of businesses with mixed fortunes, and modern management, too, advocated core competency as the way to go.